Millions of student loan borrowers may have a new source of help in dealing with their massive debt: their employers. Companies are increasingly showing interest in helping their workers pay for their student loans. While the percentage of companies offering student loan repayment benefits is small, it's expected to grow alongside the massive debt burden.
"Employers are thinking about this as a way to attract and retain talent," said Tara Fung, vice president of CommonBond for Business, which manages student loan benefit programs for companies.
Employers also offer student loan benefits as a way to take care of their employees' financial wellness, said Fung. A CommonBond survey in 2018 found workers, especially younger ones, would be more inclined to accept a job offer and stay at a company if they received student loan benefits.
Student loan debt has doubled in the past decade. Employers of all sizes have taken an interest in the problem because it impacts a growing number of potential employees, Fung said.
"They know that talent is more important than ever and sometimes that talent comes with student debt," she said.
How student loan benefits work
Employers have a range of ways to help workers with their student loans. The level of benefit can range from direct student loan contributions to programs that help employees understand the best way to repay their debt, Fung said. Some employers match retirement contributions to employee student loan payments, while others allow workers to trade unused paid time off for student loan contributions. Here's an example of a student debt relief program.
Some employees get student loan benefits as part of a cafeteria plan, also known as a flexible benefit plan. Under these programs, employees get a set amount of money and they choose how they allocate it to menu of benefits, which can include things like health savings account contributions or disability insurance, in addition to student loan contributions. Employers also offer programs to refinance or consolidate student loans.
Direct payments are less common because they're the most expensive, according to the Employee Benefit Research Institute. They also don't offer the same tax advantages as 401(k) contributions, though companies are pushing to change this.
However they work, more employers expect to offer student loan benefits in the future. Willis Towers Watson, an insurance brokerage, found more than a third of employers it surveyed last year planned to offer student loan benefits by 2021.
How to pay off student loans on your own
Most people are still on their own when it comes to student loans. Here are a few ways to pay them off faster:
- Repayment plans: Those with federal loans can choose from several plans for paying back their loans, including income-based repayment plans.
- Consolidation: If you have multiple loans, combining them might make it easier to keep track of payments and may score a better interest rate.
- Forgiveness, cancellation or discharge: In some cases, your student loan could be forgiven if you go into a job like teaching or public service. Your loan may also get discharged if you become disabled. Check the Department of Education website to see if you qualify.
Making a budget can also help you prioritize debt payments. Get started by using this easy, downloadable budget spreadsheet.
Image: Marvin Meyer