A 401K and health benefits are both great perks of working full time, but the rapidly increasing student loan debt in the U.S. has seen a new employee benefit that is meant to attract and retain recent college graduates: student loan repayment assistance.
Figures on national student debt are staggering. Today, there are more than 45 million people contributing to $1.5 trillion worth of student loan debt. That’s about $521 billion more than the total U.S. credit card debt.
The average monthly student loan payment is $393 and 11.5 percent of debtors are more than 90 days delinquent, meaning they can’t pay their monthly payments.
It’s predicted to get worse. The Congressional Budget Office estimates that $1.27 trillion in new federal student loans will be added between 2018 and 2028.
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At the University of Wisconsin, the average student loan debt for those graduating with a bachelor’s degree in 2016 was $28,255.
The latest company to offer student loan assistance in the Madison area is Esker.
Anne Donarski, Esker’s controller who oversees their finance departments, said any employee is eligible for this benefit on their date of hire.
For one to two years of employment, Esker will contribute $100 to a worker’s monthly loan payment. For two to three years of service, the benefit increases to $125 per month. And for four or more years of service, they will pay $150 per month on the employee’s behalf. This benefit lasts up to five years.
“We are using this as both a recruiting and a retention tool for employees because we are doing a lot of recruiting and hiring a lot of millennials,” Donarski said. “Student loan debt is a daunting thing that we know many of our graduates are facing.”
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Esker is not the only company in Madison to acknowledge the problems facing their workforce are changing.
In early 2018, American Family Insurance in Madison announced they would be offering a similar benefit. In a press release, American Family Insurance Chief Human Resources Officer Jim St. Vincent said the benefit would not only improve the employee’s experience, but also assist the company in recruiting new talent.
“Student loan assistance is a benefit increasingly being offered in the private sector as companies recruit employees in a tight labor market with low unemployment,” according to the Wisconsin State Journal.
Fifty-four percent of young workers report that, right now, paying off student loans comes first and saving for retirement will come later. Employers around the country are tailoring their benefits to cater to this new landscape of applicants.
By 2025, millennials will make up an estimated 75 percent of the U.S. labor force, based on the Current Population Survey, and 86 percent say they would commit to an employer for five years if the company helped pay back their student loans.
Wisconsin has consistently struggled to attract college-educated young people from universities across the country to move here for employment. Only six states — Pennsylvania, New York, New Jersey, Ohio, California and Michigan — have a lower in-migration rate of college graduates than Wisconsin.
Despite the desire for student loan repayment benefits among the millennial workforce and a state that struggles to attract out-of-state talent, just 25 percent of Human Resources professionals nationwide reports offering any guidance or assistance regarding student loans.
