Employer Provided Student Loan Repayment Programs Growing in Popularity - American Society of Employers - Emily Fioravante

Employer Provided Student Loan Repayment Programs Growing in Popularity

student loan repaymentWhile not a widely offered benefit, student loan repayment programs may be growing in popularity.  According to Forbes, there are approximately 44 million individuals that have student loan debt. 

Fortunately, due to the Consolidated Appropriations Act signed into law on December 27, 2020, employers have the ability to offer tax-free student loan repayment for employees through Educational Assistance Programs. An annual amount of up to $5,250 in eligible education expenses can be paid by employers and excluded from an employee's income, which includes student loans. This law is in effect until January 1, 2026.     

ASE’s Educational Assistance and Tuition Reimbursement Survey, which was last conducted in Fall 2018, reported that only 2% of the 177 respondents offered a student loan repayment benefit to employees. Moreover, SHRM’s Employees Benefit Survey, which was conducted in 2019, reported that 8% of companies offer student loan repayment to employees.  This data came from approximately 3,500 HR professionals that responded to the survey.  

There are many reasons why it is beneficial for companies to offer student loan repayment programs to employees.  Two of the most important reasons are for recruitment and retention of employees. A great way to stand out when recruiting individuals to join a company is to offer assistance when it comes to student loan repayment.  These employers will stand out to those looking for a job.  In addition, offering this assistance to current employees can help keep employees at the company and minimize turnover.   

According to The Network for Public Health Law, student loan debt has resulted in a loss of productivity, along with increased stress levels and diminished health.  This data was discovered from a 2015 study completed by The University of South Carolina. Another study, conducted by Northwestern University in 2013, found that the feeling of having substantial debt can result in high blood pressure, which can increase the risk of hypertension and stroke.

Student loan repayment programs are not the only way employers can support their employees and improve their recruitment efforts.  Employers may also offer tuition assistance to employees that are pursuing a degree or continuing education.  Per the 2018 ASE survey, 71% of the 177 survey participants provide some form of tuition assistance to their employees.  This is another great benefit that company recruiters can highlight in order to acquire new employees.

Last but not least, there are educational loans. Out of the 177 employers that completed ASE’s survey in 2018, two of them will provide a loan for tuition, which is then paid back to the employer.  Educational loans are not as popular as student loan repayment programs and tuition assistance mainly because they require the funds to be paid back to the employer.

ASE will be publishing an updated version of its Educational Assistance and Tuition Reimbursement Survey in early 2023. The survey will assess, among other topics, if the percentage of companies offering student loan repayment programs has increased.  To request to participate in the survey, which will open in November, please complete this form.  All participants will receive complimentary results.

 

Sources: Forbes.com; SHRM.org; networkforphl.org; ASE Educational Assistance and Tuition Reimbursement Survey (Published December 7, 2018)

 

 

 

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