For borrowers with student loans, these debts are a common source of financial stress. But getting help with repaying student debt, such as a student loan repayment bonus, from employers could be a financial lifeline with the potential for huge worker benefits.
In a 2017 survey of workers ages 22 to 33 by the nonprofit American Student Assistance (ASA), 86% of respondents said they would commit to work for a company for five years in exchange for help with paying off their student loans. And 93% said they would take advantage of a student loan repayment bonus provided by a prospective employer.
Workers and employers should both be aware of how student loans can negatively impact productivity. Education debt can make workers less likely to participate in an employer-sponsored retirement plan, and these workers tend to worry more about money.
“If [employees] are stressed out about their student loans, they are likely carrying that into the workplace,” said Heather Tredup, a partner at Aon Hewitt, a human capital and management consulting firm. “That’s going to affect their overall productivity.”
Let’s look at some of these benefits:
- Student loan repayment assistance
- Financial education
- Tuition reimbursement or education stipend
- Student loan repayment bonus
- Overtime opportunities
- Payroll advances or loans
- Employer-matched retirement savings
Work perks that provide student loan repayment help
Fortunately for today’s workers who have student loans, more employers are considering benefits that include student loan repayment help.
This fits in with what workers want. The ASA survey found that more than half of younger workers say student loan repayment benefits are a priority, falling third on the list after health insurance and 401(k) match benefits.
Consider asking your current employer to start offering certain student loan assistance benefits, or look for these benefits in your next employer. If you’re smart about your existing benefits, you can find ways to leverage them as assistance in paying student loans.
Here are some work perks that can help you with student loan repayment:
A small number of companies — about 8% — offer student loan repayment assistance, according to a 2019 survey by the Society for Human Resource Management (SHRM). While this benefit remains relatively rare, the number of employers offering it has doubled since the year before and continues to gain popularity. In fact, Forbes called it “the hottest employee benefit of 2018.”
“I think we’re finding more employers starting to look at what’s out there, and what options will really help,” Tredup said.
Employer-provided student loan repayment assistance is a work benefit that offers extra pay toward student debt. Typically, this student loan repayment help is given through a one-time or ongoing payouts to the employee or their student loan servicer.
In one unusual option, an insurance company called Unum offers to help pay student loans in exchange for employees giving up a certain number of vacation days.
Employers are also starting to see more value in providing workers with financial education and resources to help them manage their money more responsibly. Options can include financial workshops, webinars or online classes, or even access to financial counseling or planning.
“[For] a lot of new people entering the workforce, that is a barrier for people is understanding how to budget, how to handle various bills,” Tredup said. Plus, she added, financial literacy programs can help workers formulate a plan to pay off student debt.
Employers see a clear benefit to workers who have more training, education and skills. So it makes sense to offer tuition reimbursement or educational stipends to workers who are looking to get more education.
In fact, that might be why this benefit is so common. According to the 2019 survey by SHRM, more than 56% of employers offered tuition assistance.
Workers should definitely consider taking advantage of tuition reimbursement benefits. These can be especially beneficial to those who have student loans but haven’t completed a degree. With an employer covering tuition costs, returning to school will be much more affordable.
Work benefits don’t have to be directly related to education to still be useful to help you tackle student loan debt. A great student loan repayment strategy is to use extra earnings, such as a signing or annual bonus, to pay down this debt.
“Some employers are even considering a student loan signing bonus,” Tredup said. “So that when someone comes in, instead of giving the bonus to the individual it might be applied to the loan.”
One example is marketing services company Connelly Partners, which offers new employees a $1,000 student loan repayment bonus upon signing.
Working overtime can be another easy way to increase your income. If your employer offers overtime, take advantage of the opportunity and offer to work late. This could have the added benefit of showing how dedicated you are to your work.
When you’re getting paid time-and-a-half for overtime work, you will quickly rack up extra earnings. To make sure your hard work pays off, use that overtime income to make an extra payment toward your student debt.
In addition to providing extra pay, some employers offer loans or payroll advances to help employees when finances get too tight.
In fact, the 2019 SHRM survey also found that 15% of employers offered payroll advances. Others might also offer low- or no-interest loans to employees.
Of course, going into debt when you already have debt doesn’t make a lot of sense. But if you’re ever in a tight financial position and at risk of missing a student loan payment, these flexible pay options can be a lifesaver.
Employer matches for retirement account contributions are a huge benefit that more student loan borrowers could be benefitting from — especially since student debt can set workers back on saving for retirement.
An employer match can help you keep retirement savings on track without having to devote a bigger chunk of your pay to your 401(k). This means you can save for retirement and work on paying off student loans. Plus, it can pay off to invest rather than pay down student loans first.
Tredup suggested starting small with retirement savings, putting aside as little as you can afford.
“Don’t wait until you can afford to contribute the full matched amount,” Tredup said. “Even saving 1%, you could still benefit from the employer match.”
If you’re not sure what benefits you have, check with your employer or human resources department. They can help you review your benefits package and identify perks you’re not yet using or might not even know about.
Perhaps there will even be a way your employer can help you target student loans and pay them down faster.
Katherine Gustafson contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.19% effective June 10, 2020.