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4 Ways Employers Can Help Employees Pay Off Student Loans

If you need to attract and retain young and competent talent, offering to help repay your employees' student debt could be crucial.
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4 ways employers can help employees pay off student loans

There is no denying that the competition to attract talent has gotten fierce over the years. Many firms and organizations now offer sign-on bonuses, rewards, flexible working hours and plenty of other perks to retain employees. Yet, one benefit many young employees and job hunters look for is employer-supported repayment of student debt.

Student loan borrowers in the U.S. owe a collective $1.6 trillion in federal and private student loan debt as of March 31, 2021, according to the U.S. Department of Education. If you need to attract and retain young and competent talent, offering to help repay your employees' student debt could be crucial.

If you don't offer student loan assistance, your current and prospective employees may start looking for other employers that do. However, with the right strategies, you can offer comprehensive payment assistance to your employees. And with the right financial help, qualified employees can pay off debt and lighten their burden while focusing on being productive for your business.

Here are some options for employers who are looking for ways to help workers struggling with student loan debt: 

1) Student debt repayment programs. This solution focuses on a debt repayment strategy and arming employees with basic information about the student loan. Workers receive customized guidance on the payment options and how to estimate their financial needs. 

From there, employers can offer financial assistance to pay off the debt if they have a budget that allows them to set aside some funds for student debt repayment programs.

For instance, Fidelity Investments offers a student benefit tool that allows a company to make contributions to the employees' student loans and debt retirement tool. When employees use this tool to pay off their student loans, the employers contribute to a retirement fund to prepare them for the future.

2) Coronavirus Aid, Relief and Economic Security (CARES) Act provision. The provision allows sponsors and financers to make a $5,250 tax-free contribution per employee for eligible education expenses, including student loan assistance or tuition, without increasing the gross taxable income of employees.

3) Income-driven repayment plans. If your agency doesn't have a budget dedicated to loan repayments, you should encourage your workers or employees to opt for an income-driven repayment plan. This plan sets up a monthly loan payment based on family size and income. 

It enables workers to pay off the debt while considering other financial responsibilities and needs. As a responsible employer, you should bring meaningful tools to your employees to help them manage and speed up the paydown of their debt.

4) Wellness reimbursement programs and plans. You can also consider executing wellness or tuition reimbursement plans to relieve employees' student debt burden. In some companies, employees can submit about $100 for a gym membership as part of a wellness reimbursement plan. The same strategy can allow employees to pay down their student loan debt monthly. 

Lyle D. Solomon is an attorney at Oak View Law Group. 

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Thursday, January 6, 2022
Recruiting, Hiring & Training