{"id":21918,"date":"2022-05-13T11:34:30","date_gmt":"2022-05-13T11:34:30","guid":{"rendered":"https:\/\/www.potential.com\/?p=21918"},"modified":"2023-11-14T10:23:09","modified_gmt":"2023-11-14T10:23:09","slug":"student-loan-repayment-assistance-a-win-win-for-employers-and-employees","status":"publish","type":"post","link":"https:\/\/www.potential.com\/articles\/student-loan-repayment-assistance-a-win-win-for-employers-and-employees\/","title":{"rendered":"Student Loan Repayment Assistance: A Win-Win for Employers and Employees"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" itemprop=\"image\" class=\"aligncenter size-full wp-image-21919\" src=\"https:\/\/www.potential.com\/wp-content\/uploads\/2022\/05\/Student-Loan.jpg\" alt=\"\" width=\"720\" height=\"405\" \/>Image Source: <a href=\"https:\/\/pixabay.com\/photos\/woman-bored-tired-office-business-5679001\/\">Pixabay<\/a><\/p>\n<p><span style=\"font-weight: 400;\">What if your boss was to make you a once-in-a-lifetime deal? \u201cWork for me and I\u2019ll help take care of your debt.\u201d Oh come on &#8211; there\u2019s no way any boss is going to make a Daddy Warbucks offer like that!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Don\u2019t be so sure. In fact, one of the most interesting trends we\u2019re watching in employee retention is student loan repayment assistance programs. Company owners and managers are taking it seriously for qualified employees. Let\u2019s discuss how this program works.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>Employers&#8217; Student Loan Assistance &#8211; A Game Changer<\/h2>\n<p><span style=\"font-weight: 400;\">You\u2019re right in assuming this was not a thing back in grandma\u2019s day! The trend is fairly recent but definitely significant. In fact, the Society for Human Resource Management states that within the last four years, the percentage of companies investing in <a href=\"https:\/\/www.cnbc.com\/2021\/11\/09\/more-companies-offer-tuition-assistance-student-loan-repayment.html\" target=\"_blank\" rel=\"noopener\">student loan repayment<\/a> went from 8% to 17%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Furthermore, 31% of large companies now plan to offer some type of student loan assistance over the next two years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Granted, these concessions are not historical as of yet. After all, there are limits. Google is only paying up to $2,500 for full-time employees. Estee Lauder is paying $100 a month. SoFi is paying $200 a month.<\/span><\/p>\n<p>The emergence of <a href=\"https:\/\/www.creditspring.co.uk\/loans\/emergency-loans\" target=\"_blank\" rel=\"noopener\">emergency loans for bad credit in the UK<\/a> is another interesting trend paralleling the rise of student loan assistance in the workplace. While traditional lending options often exclude individuals with poor credit histories, the growing market for emergency loans for bad credit is addressing this gap. These loans are designed to help people who find themselves in urgent financial situations, providing a lifeline in circumstances where mainstream financial institutions might not offer support. This development reflects a broader shift in the financial industry, recognizing the need for more inclusive financial solutions that cater to a wider range of credit profiles. It&#8217;s a recognition that financial emergencies don&#8217;t discriminate based on credit scores and that everyone may need access to emergency funds at some point.<\/p>\n<p><span style=\"font-weight: 400;\">What\u2019s the cause of all these sudden acts of kindness? They\u2019re not so random.<\/span><\/p>\n<hr \/>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<ins class=\"adsbygoogle\" style=\"display: block; text-align: center;\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\" data-ad-client=\"ca-pub-4560705956205775\" data-ad-slot=\"9135581814\"><\/ins><br \/>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n<h2>From Resignation to Repayment Programs<\/h2>\n<p><span style=\"font-weight: 400;\">Is it coincidence that the student loan repayment experiment is happening at approximately the same time as The Great Resignation?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While the COVID-10 pandemic started the trend of people quitting or being laid off, the trend has continued well into 2021 and 2022. In fact, the quitting rate is still increasing even while big business gets back to normal. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the Pew Research Center, 63% of <a href=\"https:\/\/www.pewresearch.org\/fact-tank\/2022\/03\/09\/majority-of-workers-who-quit-a-job-in-2021-cite-low-pay-no-opportunities-for-advancement-feeling-disrespected\/\" target=\"_blank\" rel=\"noopener\">workers who quit in 2021<\/a> cited no opportunity for advancement, while 63% also cited low pay, and 57% said they felt disrespected by employers. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In fact, labor shortages are so severe, as far as millennial workers go, that retiree-aged <a href=\"https:\/\/www.bostonglobe.com\/2022\/04\/07\/metro\/labor-shortages-across-economy-are-creating-opportunities-older-workers\/\" target=\"_blank\" rel=\"noopener\">baby boomers<\/a> are a rising demographic in the workforce.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Not only are these employer-sponsored repayment programs a means to bring back younger workers, but it\u2019s also a sign of business going back to normal on a larger scale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the New York Times, many businesses were discussing <a href=\"https:\/\/www.nytimes.com\/2022\/01\/28\/your-money\/student-loans-debt-employee-benefit.html\" target=\"_blank\" rel=\"noopener\">student loan repayment plans in 2019<\/a>, but things stalled during the 2020 pandemic.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Now that companies are moving forward, they are either offering student repayment plans or plan to do so in the next 2-3 years &#8211; and even upwards of 30-40% of respondents were making it part of their retention strategy. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some companies like Nvidia, Abbott, and New York Life are sweetening the deal by offering student loan repayment assistance and a telecommuting job that lets employees work from home. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>Who Started the Student Loan Repayment Trend?<\/h2>\n<p><span style=\"font-weight: 400;\">Was this all to Trump or Biden\u2019s credit or some heated political issue? <\/span><\/p>\n<p><span style=\"font-weight: 400;\">No, it\u2019s just a natural reaction to what was a great idea &#8211; what if you could somehow incentivize student loan repayment for the employer, which would most likely suffer great loss if they just did it out of the kindness of their hearts?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The real game-changer was the Consolidated Appropriations Act of 2021, which allowed employers to count <a href=\"https:\/\/rules.house.gov\/sites\/democrats.rules.house.gov\/files\/BILLS-116HR133SA-RCP-116-68.pdf\" target=\"_blank\" rel=\"noopener\">student loan repayment as a tax-free benefit<\/a> to employees. Currently, employers can make contributions up to $5,250 per person toward \u201celigible education expenses.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under the provision, the student doesn\u2019t have to count the donation as taxable income. This government provision remains in effect until at least 2025. <\/span><\/p>\n<hr \/>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<ins class=\"adsbygoogle\" style=\"display: block; text-align: center;\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\" data-ad-client=\"ca-pub-4560705956205775\" data-ad-slot=\"9135581814\"><\/ins><br \/>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n<h2>How Do Students Receive the Money?<\/h2>\n<p><span style=\"font-weight: 400;\">The system operates similarly to a lump sum vs. annuity arrangement. Depending on the judgment of each employer, you can receive a large payment one-time, or get recurring payments. You can pocket the money yourself or the amount can be paid to the lending company. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some companies might offer the loan repayment money as a \u201csigning bonus\u201d for starting a new job, or after a trial period of working. Others may have a series of criteria that you have to complete before receiving any money, depending on the career field. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some employers have even tied these loan payments to retirement savings, allowing students to make payments on their own loans in exchange for the company contributing towards your retirement out of their own pocket. A few companies let employees apply their unused vacation time or sick days toward student loans. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>Other Benefits<\/h2>\n<p><span style=\"font-weight: 400;\">More promising employer repayment programs might include higher lifetime caps, such as $10,000. While the average cost of a student loan is over $37,000, paying almost one-third of the total balance is a great start towards building a lifelong working relationship with a model employee. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">While plenty has been written about debt repayment assistance programs as a means of employee retention, there are also other benefits &#8211; like attracting higher-quality job applicants in the first place. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies that want workers with college degrees now have a way to attract those workers with promises of paying off part of their student debt. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>Employers Aren\u2019t the Only Resource<\/h2>\n<p><span style=\"font-weight: 400;\">While employer-paid repayment gifts are great, they\u2019re simply not enough to grab a student by the hand and pull him out of debt entirely. With some educational degrees costing closer to $100,000 than $30,000, a student might wonder if getting that dream job is really going to be worth it. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">It might be &#8211; if a student can take advantage of other resources of payment. <\/span><\/p>\n<hr \/>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<ins class=\"adsbygoogle\" style=\"display: block; text-align: center;\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\" data-ad-client=\"ca-pub-4560705956205775\" data-ad-slot=\"9135581814\"><\/ins><br \/>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n<h2>Government Programs<\/h2>\n<p><span style=\"font-weight: 400;\">If a student gets a job in a specific field and with an employer that meets the criteria, some federal loans can be forgiven. Teachers who work in a low-income school for at least five years might qualify for the <a href=\"https:\/\/studentaid.gov\/manage-loans\/forgiveness-cancellation\/teacher\" target=\"_blank\" rel=\"noopener\">Teacher Loan Forgiveness Program<\/a>. <\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/studentaid.gov\/manage-loans\/forgiveness-cancellation\/public-service#:~:text=The%20PSLF%20Program%20forgives%20the,time%20for%20a%20qualifying%20employer.\" target=\"_blank\" rel=\"noopener\">The Public School Loan Forgiveness Program<\/a> forgives student loan debt if at least 120 payments were made on time, and the student worked in certain government fields, or at a qualifying nonprofit organization. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another option to pursue is that of <a href=\"https:\/\/studentaid.gov\/manage-loans\/repayment\/plans\/income-driven\" target=\"_blank\" rel=\"noopener\">income-driven repayment programs<\/a>, managed by government offices, which can help if your loan payments are higher than your income. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>The Loan Refinancing Option<\/h2>\n<p><span style=\"font-weight: 400;\">Another option would be for an employer to invest in an employee\u2019s future through private <a href=\"https:\/\/www.sofi.com\/refinance-student-loan\/\" target=\"_blank\" rel=\"noopener\">student refinance<\/a> plans. For example, a company might help a new worker qualify for a refinance loan that they wouldn\u2019t be able to get on their own. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Refinancing plans can lower interest rates, consolidate multiple student loans, and change the repayment period for a longer or shorter contract. The company might even donate some money to the new loan balance, along with added member benefits. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some of these additional benefits could include continuing education and <a href=\"https:\/\/www.potential.com\/resources\/#partners\" target=\"_blank\" rel=\"noopener\">webinar programs<\/a>, such as described on our resources page. After all, earning a degree is only part of the job description.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many companies look forward to hiring students with valuable skill sets, and experience in sales or customer service, and management. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>Employers Working with Private Lenders<\/h2>\n<p><span style=\"font-weight: 400;\">Progressive companies can also find vendors that work with employers and help them create student loan repayment benefits that won\u2019t tax their resources, or those of the student. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company may pay the vendor an implementation fee, or charge the employees a monthly fee for instituting the arrangement. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Refinancing may require that the student have a fairly high credit score and stable means of income, not to mention working towards a valuable degree. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">A company cannot co-sign for a refinancing program, but a parent, friend, or trusted individual could co-sign with a student in case their credit score was too low to qualify. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s also worth thinking about whether the company is investing in you for the future, especially if they get involved in paying off part of your loan or refinancing it. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Staying on top of your other monthly bills is important for keeping your job and making loan payments because employers will check your credit score and hold you to this contract. <\/span><\/p>\n<hr \/>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<ins class=\"adsbygoogle\" style=\"display: block; text-align: center;\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\" data-ad-client=\"ca-pub-4560705956205775\" data-ad-slot=\"9135581814\"><\/ins><br \/>\n<script>\n     (adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<hr \/>\n<p>&nbsp;<\/p>\n<h2>Warning: Private Lender and Federal Assistance Conflicts<\/h2>\n<p><span style=\"font-weight: 400;\">Be aware that if you or your employer decide to pursue private lending assistance, you may disqualify federal loan programs. Consider applying for federal help first, and if all avenues are exhausted, then concentrate on private lending refinancing. <\/span><\/p>\n<p>&nbsp;<\/p>\n<h2>The Future of Student Loans Beyond 2022<\/h2>\n<p><span style=\"font-weight: 400;\">Remember, even if your employer doesn\u2019t have any repayment assistance at the moment, you might consider bringing it up to HR, or to the owner\/manager directly, especially if they encourage employees to bring new ideas to management to consider. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Times are changing and the employer-guided student loan repayment plan is becoming a serious prospect. Even in Washington D.C. today, many lawmakers and activists are talking about what else the government can do to address massive student debt in the U.S. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Recently, President Biden announced that 40,000 borrowers would get \u201cImmediate Debt Cancellation.\u201d <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Similarly, the Education Department announced loan forgiveness of over 110,000 workers in certain public service fields, which amounts to $6.8 billion in total loan forgiveness. Read more about how to apply for <a href=\"https:\/\/www.cnbc.com\/2022\/05\/04\/education-department-forgives-loans-of-over-110000-in-public-service-.html\" target=\"_blank\" rel=\"noopener\">loan forgiveness<\/a> before the deadline. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">One could argue this is more than just a business trend. This may be representative of a changing culture and a new way of bringing millennials back to the workforce. Whatever works is a good strategy, especially in an age where the old rules no longer apply. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">For more information on innovation, modern business practices, and socio-economic empowerment, keep reading <a href=\"https:\/\/www.potential.com\/services\/#trainingcoaching\" target=\"_blank\" rel=\"noopener\">Potential.com<\/a>. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Image Source: Pixabay What if your boss was to make you a once-in-a-lifetime deal? \u201cWork for me and I\u2019ll help take care of your debt.\u201d Oh come on &#8211; there\u2019s no way any boss is going to make a Daddy Warbucks offer like that! Don\u2019t be so sure. In fact, one of the most interesting [&hellip;]<\/p>\n","protected":false},"author":48,"featured_media":21919,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,158],"tags":[],"class_list":["post-21918","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-careers"],"_links":{"self":[{"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/posts\/21918","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/users\/48"}],"replies":[{"embeddable":true,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/comments?post=21918"}],"version-history":[{"count":3,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/posts\/21918\/revisions"}],"predecessor-version":[{"id":23504,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/posts\/21918\/revisions\/23504"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/media\/21919"}],"wp:attachment":[{"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/media?parent=21918"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/categories?post=21918"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.potential.com\/wp-json\/wp\/v2\/tags?post=21918"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}