It’s time to act before staff leave for other employers who will support their studies.
College debt can be a long-term burden.
Uncover how companies can help graduates with their finances and the long-term benefits that this can bring.
As the ‘war for talent’ rages on, many companies are tweaking their benefits packages. One concept that became widely popular was assistance with student loans with the likes of Amazon and Walmart changing up their offerings.
To discuss why this was an important development and the impact it can have, UNLEASH caught up with Lydia G. Jilek, senior director and intellectual capital leader for voluntary benefits solutions at WTW.
Before leaping into the problems that graduates and large portions of the workforce face, Jilek gives insight into her role.
She notes: “I sit within our voluntary benefits space, so this includes identity theft and legal plans. But a few of us saw a need for really building out a little small practice around education benefits, because of the opportunity to really benefit employees.”
With this mission in mind, Jilek and her colleagues are enabling employers to help employees begin paying down their student debt.
Digging deeper into what employers are doing, Jilek says: “We’re also seeing increased interest in legacy tuition reimbursement plans, where employees helping employers help employees who are looking to further their education.
WTW has a large number of clients who have staff that are part of “Public Service Loan Forgiveness, which is a program that if you make 120 qualified payments, you are able to have some of your loan eliminated”.
Jilek is also involved in helping organize coaching programs for clients so that students can avoid unnecessary debt.
Speaking about the issue of student debt, Jilek comments that an 18-year-old “may not have any concept of what those dollars mean”. This is partly due to the fact that most students do not understand the levels of money required (the average federal student loan debt balance is $37,014) for a university education even if they have been working before taking on a course.
Additionally, parents who want their children to have better career paths may take “on huge swathes of student loan debt to support their children. That can impact their financial stability as they’re approaching retirement and may even preclude them from retiring”, according to Jilek.
There is a myriad of ways employers can help employees including repayment assistance and offering training schemes that won’t lead to debt.
Jilek explains: “From a repayment standpoint, we have some employers that start by providing employees with access to tools.”
These tools are needed because many graduates will have multiple loans with different providers on different systems. As a result, a member of the HR team won’t be able to get insight into what needs to be paid off without creating their own extensive spreadsheet for each graduate.
Employers can utilize vendors who “allow people to aggregate all of their student loan debt into a single dashboard, where you can see all of your loans, you can understand what your interest rates are, and then perhaps use calculators and tools to develop a strategy of your own in order to help pay down that student loan debt“.
This is a simple win for employers as the cost is “not significant from an employer level because you’re really giving employees, through this vendor, access to software”.
For those interested in a more costly but direct solution, employers can help pay down employee student loan debt.
These payments aren’t intended to replace the contributions of graduates but should help “drive down debt more quickly”.
At WTW “we try to work with vendors that are able to if the employee has not selected a particular loan, that principal payment defaults to the loan with the highest interest rate”.
Companies can reduce graduate costs by reimbursing books and fees up to $5,250 without tax on an annual basis.
Of course, employees can also opt-out of paying certain loans and control to which institution the money goes.
Education doesn’t just have to be just about debt and it can further a company. An effective way to bolster a business is by paying for university courses that will train an employee to help the organization in the long-term
Reflecting on an example, Jilek says this happens in a “whole bunch of pharmacy businesses, and Walmart is doing this in particular.
“They need pharmacy techs, and they’re essentially saying, ‘we’re going to grow our own, we’re going to hire people, or we’re going to take existing employees and run them through this pharmacy tech program’.”
In these instances, the company is building its workforce loyalty, and on some occasions is “able to influence the turnover of that population more broadly”.
These programs are still relatively new, and Jilek notes that an internal training program should be in place for five or six years before its effectiveness can be truly assessed.
Speaking candidly, Jilek comments that many organizations will be promoting their tuition programs because they “are really good press releases”.
The stories are effective because there’s a lot of interest in education programs; this is partly driven by employees.
Jilek explains: “I would say that because of the pandemic, there is an increased opportunity that some of these [education] programs can be offered online, which increases the availability of those programs to a broader swathe of people.”
On top of that, the ‘Great Resignation’ has showcased that people have a broader focus than their specific role and are interested in career development.
Looking forward, Jilek notes: “I suspect that we’re going to see an increased desire at the employee level for assistance from employers to help them with some of these costs.
“I think that direct wage increases are probably always preferable at the employee level, but benefit enhancements are going to be significantly appreciated as well.”
With all this in mind, a solid retention strategy is helping employees repay their student debts.
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Senior Journalist
Dan combines his first-hand experience alongside the latest news and opinions in the HR Technology space.
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