Whether you’re a small business owner or a hiring manager for a Fortune 500 company, getting millennials to accept your offer can be tough.
That’s because millennial expectations of the workforce are changing everything. As more companies offer work from home days, casual dress, and flex hours – not to mention free food and copious swag – it can be hard to compete.
But now, thanks to a bill that’s being proposed in Congress, you can.
Employer Participation in Student Loan Assistance Act
As of yesterday, Reps. Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) introduced the Employer Participation in Student Loan Assistance Act.
This bill is proposing “to extend the tax exclusion for employer-provided educational assistance to include payments of qualified education loans by an employer to either an employee or lender.”
In other words, employers can help pay their employees’ student loans. What’s more, this bill enables up to $5,250 to be paid out by an employer annually pre-tax. If it passes, it will apply to student loan payments made after December 31, 2017.
3 reasons employers should offer student loan reimbursement
If you’re a cost-conscious or cash-strapped employer, you might be wondering why you should offer student loan reimbursement to your employees. Here are a few reasons you should consider it as an employee benefit.
1. Attract millennials to your company
If you’re hiring at all right now, chances are you’re looking at millennials. After all, they’ve already surpassed Gen X as the largest group in the American workforce, according to a Pew Research Center analysis.
As you compete against other companies for these hires, keep in mind that some large corporations are already paving the way on student loan reimbursement.
In fact, student loan refinancing company SoFi reported in 2015 that they saw “a 300% increase over the past two years in employer adoption of student loan assistance benefits.”
And, according to SoFi, a large variety of companies are making this offering:
“Our 650+ partnerships include not only Fortune 500 companies and top 100 law and consulting firms, but also increasingly a number of small startups and more traditional companies.”
And that was two years ago. As more and more companies offer this extra benefit, it’s becoming a growing commodity that may soon become a standard offering.
2. Increase employee loyalty
In a survey Student Loan Hero ran back in 2016, more than 15 percent of respondents wanted to be more fiscally responsible while another 14.6 percent wanted a better work/life balance.
That’s 30 percent of our respondents whose lives can be improved by a better benefits package in the workplace.
Since financial responsibility and student loan debt oppose each other, helping reduce this debt is one way you can ease your employees’ financial anxiety. And increase their loyalty.
When released their latest Employee Benefits Trends Study, they found that 62 percent of respondents were “looking to their employers for more help in achieving financial security through employee benefits.”
That could mean more than half of your employees are waiting for this next big work benefit to be offered. Or potentially looking for another employer who does.
3. Help solve the student loan debt crisis
Today’s number on national student loan debt is about $1.3 trillion. And nearly $1.3 billion of that is comprised of federal student loans.
Do you know how much of the total student loan debt isn’t getting paid? A whopping 11 percent.
If you add student loan assistance to your benefits package, you’re not just giving better benefits to your employees. You’re also helping the U.S. government battle an ever-increasing load of debt.
Don’t forget, the student loan debt crisis is still growing. And for the recent graduate earning an early-career salary and paying hundreds to thousands per month on their student loans, this bill can provide breathing room where it didn’t exist before.
Not every employer can pay their employees more money. Nor does every position have the growth to earn more.
But a bill like this empowers allows employers to ease their employees’ financial pressure. And it provides employers with a tax benefit to boot.
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