Many recent college graduates aren’t able to start saving for their futures, like retirement or buying a home, because they are still stuck in the past: paying off their student loans.
As unemployment sits low at 4% and baby boomers move into retirement age, the competition for young talent grows. At the same time, the debt from student loans grows every year, now resting at a mere $1.56 trillion.
Seven out of 10 new college graduates, on average, owe $37,172.
The Employer Participation in Repayment Act, introduced to Congress early 2019, will make it easier for employers to forge a benefit plan that will greatly attract and retain young talented workers.
What does the Employment Participation in Repayment Act do?
- Permit employers to contribute up to $5,250 tax-free to their employees’ student loans.
- Previously, employers could have this benefit, but the repayment wasn’t tax free.
- This is also different than the Employer Education Assistance Program, which provides assistance for workers who are seeking additional education. The Employer Participation in Repayment Act is for those who already have the student debt.
Is adding student-loan repayment to your company’s benefit package right for you?
Here are some things to consider (from SHRM):
- Millennials will make up 75 percent of the U.S. labor force by 2025.
- An American Student Assistance (ASA) survey of 500 employees ages 22 to 33 highlights how student loan debt negatively impacts their focus, well-being and retirement planning and delays their pursuit of additional education.
- This isn't strictly a Millennial issue. The Federal Reserve reports that 6.8 million student loan borrowers between ages 40 and 49 owe $33,765 each, on average
- When PwC launched its Student Loan Paydown program in 2016, 45% of the firm's 46,000 junior employees with six years' experience or less signed up to receive up to $1,200 annually for six years.
Want to know how you can add this to your benefits package?
Reach out to us at Get-Benefits and we’d be happy to help you craft the perfect plan for student loan repayment.
There are different types of plans that are customizable to fit the needs of the unique company. It varies on years the benefit is given and if you’re going to cap the repayment at a certain amount.