The class of 2015 graduated with more student loan debt, on average, than any other class in United States history. Over 7 out of 10 graduates left college with some amount of debt, and the average held just over $35,000. It wouldn’t be surprising if these numbers continue to grow for the class of 2016 and beyond.
As more and more students take on debt to finance their higher education, the importance of securing a well-paying job has never been greater. Being unemployed or underemployed (based on the degree obtained) with tens of thousands in debt is one of the last places that graduates want to find themselves.
Wouldn’t it be amazing to work for a company that not only pays you a competitive salary but also helps pay down your student loan debt? Though it may seem too good to be true, this is actually an incentive that companies are starting to offer to their employees.
Currently, only 3 percent of U.S. employers offer this attractive perk. However, as some large companies such as Pricewaterhouse Coopers, or PwC, have announced the benefit, more are likely to follow suit. From the company’s point of view, they can advertise it as part of the benefits package when recruiting new talent. Employees, on the other hand, essentially receive a bonus each month to put towards student loans to help pay them off sooner.
How Do Student Loan Repayment Benefits Work?
Typically, companies provide a certain amount of money to be used towards student loan repayment each month or refund employees at the end of the year.
PwC, the global accounting and consulting firm mentioned above, will start providing up to $1,200 a year to associates and senior associates. The benefit will last up to 6 years unless the student loans are paid off sooner. U.S. Chairman and Senior Partner, Robert Moritz, when talking about the company’s employees, explained that “the benefit will help reduce their student loan principal and interest obligations by as much as $10,000, and shorten their payoff periods by up to three years.”
Chegg also announced a similar perk in April of last year. This version of the program provides $1,000 a year to employees with educational debt and provides free access to an online tool that helps them decide the best strategies for repayment.
More recently, LendEDU launched its own initiative to help employees pay down student loan debt. Employees receive $2,400 per year, or $200 per month, to help alleviate the burden. The benefit aligns with the company’s mission to help Millennials better manage their finances and eliminate debt.
It is important to note that under current federal law, student loan reimbursement is taxable to the employees. The employer may deduct the taxes directly from employees’ paychecks or the employees may be responsible to file the reimbursement on their tax returns. Change may be coming soon, however, as the Student Loan Repayment Assistance Act is currently in Congress. Under this bill, contributions to student loan payments in a student loan payment assistance program, by both employees and employers, would be tax deductible, limited to $6,000 in a taxable year.
Should I Consider This Benefit In My Job Search?
As more students enter college each year, the competition for well-paying jobs also increases. If you are lucky enough to have the chance to choose among several companies, a student loan repayment benefit may end up swaying you towards one over the other.
In terms of money, it would only make sense to choose one prospective employer over another because of a student loan repayment benefit if the salaries and other aspects of the benefits package, such as the 401(k) program, are very similar. While it is nice to have an employer contributing to your debt repayment, if you are making thousands less annually, the program won’t end up saving you any money as compared to the other job.
Aside from the money factor, a company’s offering of a student loan repayment benefit may give insight into its culture. Many companies claim that they have their employees’ best interests in mind, when in reality, they only see them as another number. If a company’s leaders acknowledge the struggle of repaying debt and offer to help, it is a sign that they truly care about their employees. Knowing that you are important to the company and being treated as such makes for a happier and more satisfying work experience, which in turn leads to a happier and more satisfying life.
If you have recently graduated or are graduating in a few months and are searching for a job, be sure to consider the benefits that employers offer. Even if you are offered a higher salary at one job as compared to another, you may end up receiving less total compensation when the extra benefits are factored in. While it would be nice to obtain a higher education for free, it simply isn’t an option in most cases. Student loan debt can be overwhelming, and it is encouraging to see some companies trying to help their employees overcome it.