Today's college graduates are leaving their alma maters with a huge heap of debt that will stick with them for years, if not decades, to come. The average graduate will need to pay off $32,731 in student loans, a burden that can delay other financial milestones such as owning a house, starting a family and saving for retirement.
The painful reality of student loan debt has created an opportunity for companies to attract workers with a new type of perk: student loan repayment assistance. Rather than trying to woo potential workers with office foosball tables and team-building karaoke happy hours, some organizations promise to help with student loan repayment, though the practice remains far from widespread.
“People estimate that about 4% of companies offer the benefit today, so it’s still a relatively untapped market,” said Meera Oliva, chief marketing officer for Gradifi, a benefits company that helps firms set up and facilitate their student loan assistance programs. “It’s really an opportunity for a company to differentiate themselves in the marketplace as a first mover.”
A typical student loan repayment program might put $100 a month toward your student loan balance—but some offer more. First Republic Bank, for instance, offers employees $100 per month for the first year of the program, $150 per month for the second year and $200 per month for the third year and beyond, until you’re no longer in debt.
“We’ve actually seen a technology company that offers $450 a month,” Oliva said. “Employers can design programs, including eligibility requirements and contribution amounts, that meet their specific recruiting and retention goals.”
And recruiting and retention are key. According to a 2017 study by management consultancy firm Oliver Wyman, 45% of millennials found student debt assistance a more compelling workplace benefit than retirement contributions, health insurance or childcare.
“It’s a good point of differentiation for us,” said Dave Almeda, chief people officer for Kronos, a workforce management company that offers student loan repayment assistance. “It addresses what we knew was a real pain point for a lot of folks.”
At Kronos, employees get up to $500 per year toward their student loans for as long as they work for the firm—and the company reports 50% less turnover among employees who are in the program. “This seemed like a fairly easy opportunity for us to do something that would be good for employees and also benefits us,” Almeda said.
The student loan repayment assistance program was one of the reasons that Pennie Douligeris took a job as a product manager at student loan firm CommonBond. “It’s made a big difference in my finances—and my peace of mind,” she said. “I’ll be paying off my student loans early.”
Companies are banking that the lure of student debt assistance will bring in the young, talented employees they need to survive and thrive in today's competitive marketplace. “For a lot of particularly young people in the workforce, student loan debt is staring them in the face and retirement feels really far away,” Oliva said. “And this is the financial hurdle they need to get over to save for a house and put money in their 401(k).”
17 companies that offer employees student loan assistance
From insurance and beauty companies to education start-ups and media publishers, a panoply of employers offer student loan repayment options to help their workers chip away at student loan debt, which has tripled in the last decade, surpassing even credit card and auto debt.
Aetna: The insurance company matches workers’ student loan payments up to $2,000 per year, with a lifetime cap of $10,000 toward qualifying loans.
Andersen Tax: This independent tax firm offers regular, full-time employees up to $100 a month toward student loans for 60 months, with a $6,000 lump-sum payment at the end of the five-year period for a total of $12,000 overall.
Carvana: This e-commerce car company offers up to $1,000 a year to full-time employees to pay down student loan debt.
Chegg: This homework-help firm offers a maximum of $1,000 per year toward student loans, with no lifetime cap.
CommonBond: At this company, employees receive $100 a month paid directly to the student loan servicer, and there are no lifetime caps.
Estée Lauder: This beauty company offers employees $100 a month toward student loans, with a lifetime cap of $10,000.
Fidelity Investments: Employees with more than six months of tenure can receive up to $2,000 a year toward their student loans and up to $10,000 over five years. The program has reduced turnover by 75% for first-year participants.
First Republic Bank: Employees here receive $100 per month in the first year of the program, $150 per month for the second year and $200 per month for the third year and beyond. There is no lifetime cap.
Freddie Mac: Eligible workers can receive up to $9,000 over a five-year period to help pay down their student loans.
Guild Education: Employees at this adult education start-up receive up to $100 a month toward student loans, with no lifetime cap.
Hulu: This streaming media company will match whatever employees are paying in student loans, with a limit of $1,200 per year.
Kronos: Employees can look forward to receiving $500 per year toward student loans for as long as workers are with the company.
Live Nation: Employees at this events promoter company can receive a match of $100 a month in student loan payments, with a lifetime cap of $6,000.
Natixis: This corporate and investment banking company offers $1,000 a year to all employees with any federal or private student loans, up to a maximum of $10,000 over a 10-year period.
Penguin Random House: Regular full-time workers with at least one year of tenure may receive up to $1,200 annually while they work for the company, for up to seven and a half years, with a lifetime cap of $9,000.
PwC: At this audit and assurance, tax and consulting company, associates and senior associates can receive $1,200 per year for up to six years.
SoFi: This student loan refinancing company recently settled with the FTC over ads that were considered misleading to consumers, but it offers its own employees $200 a month toward workers’ student loan debt, with no lifetime cap.
How to maximize your student loan repayment assistance benefit
“Student loan repayment benefits are still relatively new and can vary widely, so there’s no standard for how to pay them out or administer them just yet,” said Elyssa Kirkham, a financial expert with Student Loan Hero. "So, it’s important to make sure you understand how your plan will work.” Keep in mind these tips if your company offers this employee perk in your benefits package.
Review your benefits carefully
Make sure you understand how the benefit works and any limitations that apply to it over time. Some companies will provide a monthly match for student loan payments, while others will pay out the benefit annually. “Your student loan repayment match might also be paid out to you as a bonus, so payroll and income taxes will apply,” said Kirkham, a financial expert with Student Loan Hero.
Never leave money on the table
If your employer matches your student loan payments up to $100 a month, but your student loan payments are only $85, round up to $100 so you get the full company benefit.
Only spend the money on loans
Some companies pay the benefit directly to your student loan servicer, but others give it directly to you. Don’t spend the cash on something else. “You won’t be getting the full intended benefit of this student debt assistance if you don’t use it to make an extra payment toward your loans,” Kirkham said.
Don’t underestimate the impact
An extra $1,200 a year may not feel like much if you’ve got a large balance, but every bit helps—and what you pay down now will save you even more in the long run. “The bigger impact is on the interest, because less accumulates over time,” said Elaine Florentino, an audit senior with PwC who’s enrolled in her company’s student loan assistance program. “It helps decrease the balance, and over time, the effect on the interest is more substantial than just the $1,200 per year.”
Don't let the benefit slow down your repayment plan
Sure, if you let those loans stick around, you’ll get $10,000 over 10 years from your employer. But if you can pay your balance off in five, do it. “Remember that your student loans will keep charging you interest and costing you in the meantime,” Kirkham said. “Definitely compare your interest costs with the benefit you might get, to see if keeping them around to claim more student loan repayment assistance will actually pay off.”
Don't lose perspective
For each job offer you get, compare the job and complete compensation package. “It doesn’t make sense to accept one job that doesn’t provide health insurance or pays $5,000 less per year because it offers a student loan benefit worth $1,200 per year,” Kirkham said.