Throughout the country, Human Resource Managers are occupied with constructing the benefits package 2020 for their employees. Amidst this activity, an important question arising to them is: How to facilitate the growth of the company and increase its worth by contributing to its value? The answer to it, for various employers, is to make it convenient for their employees to manage the debt of student loans.
Student loan debt has augmented immensely in recent years. The tuition fees of colleges have exceeded in 2008 by 439% as compared to 1982. Federal reserves had concluded the debt of student loans to be $1.5 trillion which is due on 44 million Americans in early 2018; this amount was beyond both auto loan and credit card debt. This massive amount of debt has been accompanied by emotional suffering. A survey conducted in 2018 by Laurel Road put forward the result that 54% of educated college adults hold the trauma that they would not be able to generate sufficient money to accomplish their financial desires.
In present times, debtors are looking for unique measures for managing their debts to save money. Lately, a national healthcare company named Abbott Laboratories received the chance, by IRS, of contributing to 401(k) plans of their employees which is based on the payment of employees’ student loans. In partnership with the corporate sector, student loan refinance companies have offered several refinancing possibilities, without any cost to the company, for students to save money.
It’s both challenging and essential to keep employees satisfied as job abandoning rate has grown rapidly since 2001. Keeping employees happy includes providing practical assistance. Nowadays, employees are pursuing to form a worthy relationship with employers. Employers can easily achieve such a relationship by providing benefits regarding student loan repayments.
Some topmost reasons for integrating the benefits of student loan repayment in the employees’ 2020 benefits packages include:
Incentivize, Employ and Sustain
In today’s challenging situation companies can encourage talented young individuals towards their team, by offering benefits of student loan debt. The value of student loan benefit could be understood through the survey carried out by Laurel Road on millennials which showed that 58% of individuals would prefer to repay the student loan benefit instead of going for a vacation. Thus, offering such financial relief could act as a decision making factor for individuals opting for jobs, also it can play a significant role in attracting valuable talent to the company’s asset.
Design Flexible and FreeBenefit Program
Employers can set up student loan benefit programs by keeping the track of firm’s bottom line and as per the needs of their employees; the selection of appropriate lenders and refinancers which can provide funds for employees is a crucial factor in this process. Lenders can modify the program according to the requirements and concerns of employees in such a way that it cost nothing to the company.
The Struggle of Paying off Student Loan Debt vs. Retirement Savings
The debt of student loans leaves the employees confused between the options of either having retirement savings or clear off their student loan debt. A study of Boston College’s Centre for Retirement Research has concluded that graduated individuals who are in debt of student loans managed to have 50% less savings, as compared to those without debt, in 401(k) plan, by the age of 30. Retirement savings and student debt both are financial necessities of employees; hence they should not be made to stand in a way where they have to choose one of these. Thus, the benefit of the student loan would contribute to decreasing the financial pressure of employees.
Facilitate Employees’ to Save Money
Employees are attracted to student loan benefits because they could have extensive savings through it. The option of refinancing provides decreased interest rate or lower monthly outlays; employees can easily have massive savings through refinancing. Eventually, employees could save thousands of dollars in the long run. Each financing company would offer differing saving amounts; some companies have exclusive proposals which could result in large-scale savings. Hence, it depends on the employer to select a suitable one.
A firm, Willis Towers Watson, carried out a survey according to which the quality of work of 31% of employees is affected due to financial pressures. Likely, 74% of employees have constant stress, because they are debtors of student loan, which hinders their productivity level, they subconsciously think about their debt during job hours, damaging their efficiency. So, along with tangible savings through benefit programs employees should also be given intangible benefits to lessen their mental pressures and anxiety.
In previous years, there was a record-breaking increase in debts of student loans. After seeing the statistics employers are well aware of the importance of providing their employees with benefits related to student loan debt, such as the option to refinance student loans or access to the best student loans, to lower employees’ burden. In such circumstances, the possibility of refinancing has a wider chance to gain popularity as it does not cost anything to the employer. The future can be expected to have an increased number of employers who would create ways of providing student loan benefits to employees.