February 2018 update: The Memphis, Tennessee, student loan assistance benefit discussed below is no longer being offered. But you can find student loan repayment assistance programs to help you better tackle your debt.
Ever wished you had a fairy godmother who paid your student loans every month?
For government employees in Memphis, that wish is coming true — sort of. Yesterday, the city announced a student loan assistance program for its employees. Here’s how it will work.
What you need to know about the Memphis student loan assistance program
“As far as we can tell, there’s no other municipality offering this type of benefit,” Memphis’ Chief Human Resources Officer Alex Smith said in an interview with Student Loan Hero.
“It’s a complement to what we’re already doing: looking at new ideas and new ways to solve different issues in the city.”
According to its human resources page, the city will contribute $50 per month toward employees’ student loans — with no lifetime limit. The Student Loan Reduction Program kicks off July 1, 2017.
To qualify, you must be an active, full-time employee who’s served the city for at least one year. The benefit is only triggered after employees pay the minimum on their loans. Tuition.io will manage all payments.
Both federal and private loans are eligible, with the following exceptions:
And though $50 per month may not sound like a lot, that’s an extra $600 per year on your student loans.
Say you have $35,000 in loans at a 5.70% interest rate; that extra $50 per month would allow you to pay off your loans nearly a year and a half early and save $1,749 in interest.
We certainly think that’s worthwhile — don’t you? To determine exactly how much a student loan assistance program could save you, use our student loan prepayment calculator.
Why Memphis is providing student loan assistance
A main driver behind the Memphis student loan program is to attract and retain talent.
When Smith was appointed in January 2016, she immediately held town hall meetings and conducted an employee survey.
“We’ve been on an 18-month journey looking at different ways to enhance the value proposition for prospective employees, as well as to retain current employees,” Smith said. “We quickly realized we had a recruiting and retention concern — particularly for police and fire.”
Although the city already offered a tuition-reimbursement program of up to $3,000 per year, it didn’t help with student loan debt. And, as Smith explained, “We knew our workforce was looking for additional support.”
Their innovative solution? Student loan assistance.
So far, the feedback has been incredibly positive. More than 100 people signed up on the day the program was announced. It’s also received considerable press coverage.
“When you do these things, you do them because you believe they’re the right thing to do,” said Smith. “We know this is an important issue to our employee base — but it’s exciting the news wants to talk about it, too.”
For Smith, it’s also a personal victory. A recent transplant from the private sector, she’s found public service rewarding and hopes this program will encourage more people to follow suit.
“We are looking to be competitive and show people that public service is a viable option for their career,” she explained.
More employers offering student loan assistance
Although Memphis might be the first city to offer this benefit, some private employers have been in the student loan assistance game for a while.
In 2015, 4 percent of employers offered the benefit, according to Willis Towers Watson. That number is expected to reach nearly 20 percent by 2018.
Meanwhile, a 2016 Student Loan Hero survey found that nearly 40 percent of borrowers believe student loan assistance is a “very” or “extremely” important job benefit.
Here’s a small selection of employers offering student loan assistance programs:
- Aetna: $2,000 per year, with a lifetime maximum of $10,000
- Fidelity Investments: $2,000 per year, with a lifetime maximum of $10,000
- PricewaterhouseCoopers: $1,200 per year, with a lifetime maximum of $10,000
Why student loan assistance matters for you
We don’t need to tell you that student loans are a huge financial burden.
And since most of us went to college to advance our careers, it makes sense for employers to help us repay that investment.
Because governments are often known for their red tape — not their innovation — this is great news for job seekers and student loan borrowers alike. If a city like Memphis is willing to offer this unique benefit, other public and private employers may soon follow suit.
Keep an eye out for employers that help with student loans, and if you’re happily employed, ask your employer if they would consider hopping on board.
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