Top Millennial Perk: Education Debt Relief Plans
Millennials born between the early 1980s and mid ’90s have amassed higher student loan obligations than all other generations. They also are becoming the chief workforce demographic. This means gym memberships, free snacks, and holiday parties aren’t enough to entice this talent group to accept jobs. These needy young adults are being very selective by looking for employers that offer education debt-relief plans, a growing benefit trend.
Financial Burdens Sway Priorities
Outstanding U.S. student loans have reached a staggering $1.3 trillion. Almost seven of every 10 alumni owe considerably high sums for earning recent college or trade school degrees. The 2015 graduating class alone racked up an average of $35,051 in education debts per person. Huge financial drains are causing current scholars to reconsider if academic credentials will help them land high-paying positions. Economic issues are influencing which majors they pursue.
Such overwhelming responsibilities force workers to choose between reimbursing scholastic loans and achieving other impending yet costly life milestones like marriage, home ownership, and families. Many millennial employees elect to pay down debts instead of saving for retirement that is roughly four decades off in the distant future. Due to high lender balances, younger personnel who participate in their employers’ 401(k) plans contribute low percentages that are too insufficient to provide for late-life workforce exits.
Saving in early adulthood is the best way to boost investment compounding and growth over time, improving staffers’ chances of accumulating enough money to retire. However, trying to compensate for not building wealth soon enough during their later years is challenging. Then, workers must contribute much larger percentages of their incomes while possibly also funding their own children’s expenses and/or elderly parents’ care.
Current Monetary Assistance
A study found that almost 80 percent of people who received educational advances prefer working for firms offering repayment assistance programs with matching opportunities. Of those, 49 percent favor school-loan contributions over company-sponsored 401(k) plans. Other research shows that half of recent graduates wish their employers would subsidize their college balances instead of health insurance or retirement.
Sadly, only 3 percent of enterprises offer scholastic loan repayment plans currently. Typical industries include technology, law, and medicine — all specialized fields that require lengthy and expensive schooling. Some benefits may help government workers and teachers. Luckily, forward-thinking companies are enacting creative programs to help struggling millennials and inspire future generations of business leaders to choose higher education.
Emerging Benefit Trend
When considering appropriate options to compensate their teams, perceptive firms offer help where young workers need it most: paying down student loans. Companies are devising various incentives. Some put $100 per month toward staffers’ college bills for as long as six years. Other outfits lure new hires with sizable contributions over preset intervals, following low monthly expenditures with balloon payments several years later. Both strategies ensure loyalty.
Group-sponsored programs that combine debt relief and retirement savings offer balanced approaches that can set workers up for more secure futures. Such win/win situations enable reducing loans while building up funds for their post-work periods. When staffers make school payments, their employers deposit pretax subsidies into their retirement plans — even for non-participating team members who are not eligible to receive matching contributions.
Company assistance possibilities include fixed dollar amounts, proportions of workers’ college loans, and percentages of staffers’ total compensations by payroll periods or at bi-weekly, monthly, or annual intervals. One industry expert doesn’t foresee student debt pay-down programs becoming as popular as 401(k) retirement plans, but he anticipates as many as 100,000 businesses offering options between 2021 and 2026.
Today’s young job seekers want unique employment benefits that address their top financial issue. Firms hoping to interest, hire, and retain those millennials are embracing their education debt concerns. Company loan contributions are cost-effective recruitment tools that reinforce workforce knowledge, skills, innovation, productivity, loyalty, and satisfaction.
Your support could lessen millennials’ financial burdens so they can plan for futures goals. Benefits that shave off $10,000 of workers’ loans can shorten payoffs by as much as three years. The chances of saving enough money to buy homes or start families climb when carrying less student debts. Options that also pad their retirement accounts fulfill needs at both ends of the career spectrum. National PEO can simplify that additional benefit when administering your company’s Employee Assistance Programs. Complete our online form to request a group benefit quote.
Categories: Employee Compensation