This new job perk could save grads thousands on student loan debt
You went to school for a better-paying job and a bright future—and in return, you get slammed with student loans. Employers understand your predicament, and they want to help.
With college costs higher than ever and an economy that’s slow to recover, employers are introducing a new benefit program that’s sure to attract our nation’s brightest—and coincidentally, furthest in debt.
That’s right: Student loan debt repayment is on the horizon—and the best part is that it comes with a lifetime limit.
According to a recent study by personal finance website NerdWallet, “Undergraduate student debt holders could shave off nearly three years of payments and have $4,100 cut in interest from what they owe.”
It’s a trend companies like PricewaterhouseCoopers, Natixis Global Asset Management and Fidelity Investments are pioneering, and it makes perfect sense: Employee gets financial assistance from employer; employer is able to recruit top talent. Can you say win-win?
You’re wondering: Student loan debt is nothing new, so why am I only hearing about this now?
According to Natixis Global Asset Management Executive Vice President of Retirement Services Ed Farrington, the multinational asset management company is helping lead the effort because they have a large number of millennial employees and spend considerable time and money training them.
“We wanted to put our own employees on a solid foundation,” he says. “The important message is that the student loan debt is tied to retirement. It is an important message to millennials to get on a good path to your financial future. The importance of starting early is critical. We want to educate people about these concerns and do something for our employees.”
Meanwhile, iontuition, a student loan management tool, found that nearly 80% of student loan borrowers indicated they “would like to work for a company that offers repayment assistance with a matching opportunity.” Further, 55% of respondents say they “would rather the amount they are paying for health care go toward their student loan balance.”
As indicated by the NerdWallet survey, the average student loan borrower in the U.S. has nearly $30,000 in loans. Not to mention, the 2015-16 direct subsidized and direct unsubsidized loans interest rate is set at 4.29%, private loans average between 9% and 12% and the Federal Reserve is likely to incrementally increase rates in the coming years. Sigh. Companies that want to recruit talented graduates who are burdened by debt are beginning to recognize this issue and want to help.
For law graduates specifically, this benefit is a welcome financial relief. Average student loan debt is at $147,535, according to the NerdWallet study, and “the average law grad who enrolls in an employer contribution plan can save $5,329 in interest.”
While that’s not a high percentage, any aid is good aid. And if law grads refinance loans too, they can save an average of $13,017 in loan interest, as the report states.
It’s an investment that companies hope will pay off in the future.
Sebastian Fung, vice president of marketing at WeFinance, a San Francisco-based crowdfunding platform, has friends in the enterprise corporate finance world who have told him that this perk is one of the reasons they took the job.
“I think this will be a growing trend for traditional industries to attract millennials who are more drawn to cool positions at places like Google,” Fung says. “There's a big brain drain from traditional industries, especially finance/consulting/Fortune 500 leadership programs, to startups that are promising other perks.”
You can be sure with more than 40 million college graduates in the U.S. facing student debt, many with loans totaling tens of thousands of dollars, we’ll see more and more companies jumping on the repayment assistance bandwagon.
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