While benefits like 401K contributions and matches are certainly sexyto my generation, it seems these millennials have different ideas as to what makes an employer benefit attractive, and employers are listening. By 2025, these millennials will make up 75% of the workforce, and as the war on talent rages, employers recognize the importance of not only attracting but retaining this portion of the workforce. This workforce is also arguably one of the most researched and analyzed generations. It is apparent that they value all aspects of employment differently than previous generations. Attracting top talent is just one piece of this battle, millennials are notoriously less committed to their employer, and do not view switching jobs as a negative. A Gallup Research report shows that about 21% of millennials report switching jobs in the next year and 60% are open to a new opportunity. Millennials turnover costs the US economy an estimated 30.5 billion dollars annually.
So what is the latest and greatest thing that employers can offer to make them stay? Some employers are looking no further than one of the biggest financial crisis’s of our time, the 1.5 trillion dollars in student loan debt. Plans called SLRPs or Student Loan Repayment Plans are gaining momentum to set them apart from the competition. The process is usually managed by a third party, and allows the employers to make monthly contributions to the employee’s loan. Sexy.
The reality is, this crisis does not just impact Millennials. SHRM reports that the Federal Reserve shows 6.8 million student loan borrowers between 40 and 49 owe over $30,000 each on average. Companies are literally targeting a large segment of the workforce with these policies.
These plans are still not commonplace; SHRM reports that out of the companies they surveyed, only 4% of companies offer these plans. Companies that offer these plans though probably kill it at college job fairs.
Fidelity and Aetna both have programs that offer up to $10,000 a year to provide financial assistance to assist in loan repayment as well as financial tools to help these employees manage their debt. A majority of people dealing with this debt did not have the financial acumen at the time they took the debt on.
The companies that are considering this benefit range in employer types, public to private… tech to banking. Some companies offering them are:
- Penguin Random House
- Pricewaterhousecoopers (PwC)
- First Republic Bank
- Live Nation
Things to Consider:
- SLRP’s are still considered taxable income for both the employer and the worker; there is pending legislation.
- Consider how you will handle questions of fairness. Are other employees going to understand contributing financially to a segment of the company?
- Financial counseling is a big part of the equation for these borrowers who may not have the financial acumen to manage this debt.
- What are the repayment requirements when an employee leaves?
- Do you end up retaining employees that really do not want to be there, just for the benefit?
While I may sip Merlot, and not an IPA and I may still think things like 401ks are hot, I like this trend and feel it is really requiring employers to meet employees where they are today. The reality is, it is almost impossible to plan for retirement when today’s debts are burying you.