With the class of 2015 graduating with the highest debt average of any college class to date, student loans have become the norm for nearly 40 million Americans.
More and more graduates are factoring their student loans into their job making decisions post education, looking for their best hope at successfully paying down their loans while still earning a living. Unfortunately, the two don’t always go hand in hand.
What’s the Plan?
The Boston technology company Gradifi is taking steps to aid both graduates and their business platform. Partnering with firms such as PricewaterhouseCoopers, a company that offers $1,200 per year for up to six years towards paying off student loans for employees in their first employment tiers, Gradifi has launched their own program allowing employers to similarly contribute to their employee’s loans. Steps are being taken towards implementing similar programs elsewhere, as well.
Why Student Loan Aid?
Companies hope that by offering such an enticing student loan payment package, they will be able to have a bit of a head start in the recruiting pool post graduation. More graduates will be inclined to apply for careers where they can have assistance with their loan payments, allowing the companies to have first pick of the new talent. A survey done on ionTuition revealed that 55% of of those considering taking out, or currently struggling with, student loans, prefer student loan assistance over health care assistance from their employers. Additionally, close to half said they would also prefer student loan assistance over a 401(k), a staggering change from a mere decade ago, when a 401(k) was the ultimate benefit a company could offer a young startup employee.
Will it Work?
More and more companies are working this plan into their benefits package, increasing their ability to compete with other companies for new employees. Tim DeMello, Gradifi’s chief executive, says that 40 companies are on a waiting list to implement similar programs next year. He expects those numbers to skyrocket in coming years, saying that in the next decade or so, as many as 100,000 firms will be offering student loan aid benefits.
Others are more skeptical as to the success of the plan. According to the Society for Human Resource Management, only 3% of employers currently offer such benefits, and many are less inclined to believe it will catch on so quickly, if at all. There are worries as to the ability of student loan aid alone being able to draw potential employees to a company. They must have an interest in the company before being able to be drawn in by benefits, and it’s possible that the plan just won’t be enough.
However, the plan has merit. Employees get an increase in take-home pay rates without companies having to deal with salary increases. It could also instill more loyalty in an employee to have them receive student loan aid each year they continue to work for a company, which could mean an increase in productivity and more pleasant work environments.
All in all, the plan seems to make sense. Where it goes from here, who can say, but with big name companies such as PricewaterhouseCoopers involved and invested, hopefully there will be an increase in student loan benefit plans across the USA for the millions struggling with their debt.
If your employer doesn’t offer a plan like this you should look into consolidating your existing student loans. In many cases you can get a lower rate when consolidating and refinancing your student loans. User our student loan consolidation directory to find lenders than can help you out.