Companies have a new carrot to dangle in front of college graduates – help repaying student loans – and experts believe it quickly will become the gold standard benefit for the next crop of college graduates.
“Getting help repaying student loan debt is at the top of the list of benefits for today’s graduates,” Bruce Elliott, manager of compensation and benefits for the Society for Human Resource Management (SHRM) told Debt.org. “This is the start of a trend for the Millennial generation. Millennials already are driving the bus on marketing and this is going to be the start of them driving the bus on employee benefits.”
More than 70 percent of the class of 2015 graduated college with student loan debt. The average debt is $35,000, the highest in history. It has been blamed for slowing the economy by forcing Millennials to postpone things like buying cars and houses or getting married.
PricewaterhouseCoopers (PwC), a professional services firm, became the largest employer in the country to offer student loan repayment when it announced on Sept. 22 that it would give entry level employees $1,200 a year to reduce their debt. PwC, which hires 11,000 college graduates a year, will pay the money directly to the bank servicing the student loan account and it will be taxed as income.
“We want to solve important problems and we view student loan debt as an important societal problem,” Rob Gittings, vice-chairman at PwC told Debt.org. “The burden student debt places on Millennials in the workforce and their inability to invest in homes and cars and the lives of people around them, is a growing problem. We want to be part of the solution.”
Few Employers Offer Student Loan Repayment
A recent study by SHRM showed that only 3 percent of employers currently offer help repaying student loans. According to Elliott, most are aimed at tough-to-fill positions like teachers, doctors and nurses and are funded by government agencies rather than private employers.
PwC is making the benefit available starting July, 2016. It will pay the $1,200 for up to six years ($7,2000 total) for associate (entry level) and senior associate level employees, who make up nearly half of the company’s 46,000 member workforce.
“For us to be the employer of choice, we need to be sure our benefits are addressing the pressures these graduates are facing and student loan debt has been identified as a significant burden,” Gittings said.
PwC decided to make the offer available to any employee hired in the past year, which means Gabi Gutierrez qualifies. Gutierrez, a 22-year-old whose family moved from Chile to the United States for better education and job opportunities, has $30,000 in student loan debt. She said it caused her to move back in with her parents after graduating from Virginia Tech last May.
“Getting a salary and then help paying back my student loan is a huge benefit,” she said. “Most of my friends from college had student loans and if they couldn’t move back in with their parents, they have to live on a really tight budget because of rent and utilities. Something like this would be really attractive for them.”
Companies Expected To Jump In Soon
Mark Kantrowitz, considered the leading expert in the country on student loan debt, is convinced the benefit will be available to a lot of members of the Class of 2016 and beyond.
I expect a lot of companies to provide student loan forgiveness or loan repayment assistance, even if they don’t compete directly with PwC.” Kantrowitz, senior vice president and publisher for Edvisors.com, said. “Recent college graduates are more concerned with repaying student loans than getting their employer to match their 401(k)s. They will appreciate an employer who is responsive to their needs.”
“We hope this will give a competitive edge, but we are prepared for and encouraging others to be fast followers,” he said. “We believe this is a societal problem and it would be hypocritical of us not to encourage our clients and other businesses to join us as part of the solution.”