Paying off student loans is an incredibly challenging task for graduates across the United States. With rising annual tuition costs, students typically leave college with a rough average of $30,000 in debt. Assuming they borrowed from a federal lender, there are plenty of flexible ways to repay the amount. However, any time the debt goes in hiatus, deferment, or forbearance, interest gained on the debt ultimately expands its lifespan. For some, this is the only choice, and anchors them to low earning power.
Forward thinking repayment options are always cropping up, fortunately. One that is slowly growing in popularity is employee assisted payments. The primary idea is a business will pay a student’s monthly loan bill up to a certain amount, typically on terms of how long the individual works for that business.
Aetna is one such company spearheading this helpful approach. A health care titan, Aetna is looking to help students pay up to $10,000 in loans for each individual. Full time employees could expect to see $2,000 annually paid toward loans. Part time workers also receive benefits, with half the amount paid in totality (up to $5,000).
The process is expected to begin in 2017. In order to qualify, students will need to have graduated from accredited institutions – undergrad or grad – within at least the past 3 years.
Mark Bertolini, CEO of Aetna, proudly stated this will help workers “build a better world” as they can focus on the future, rather than bills.
This trend has begun to gain traction, adding to the rough 4% of US businesses following this practice. Among Aetna, others include Nvidia, a PC hardware business focused on graphical fidelity. Others also include Natixis Global Asset Management in Boston and the Memorial Hermann Health System in Texas, according to the Society for Human Resource Management.
Finding new workers in a competitive market has become a brisk challenge, businesses have found. Many new graduates often find work related to technology, retail, or finance. Because of high loan costs and a consistent need to gain higher pay, these students move from companies quickly.
The trend may continue as other businesses have already demonstrated success with the benefits model. Fidelity and PriceWaterhouseCoopers are two such examples, where the latter paid thousands in 2015 for students. According to PwC, 80% of their workforce comes from graduates looking to start paying down loans. Currently, more than 6,300 of PwC staff utilize the program, with the number expected to rise in the following years.
These programs are not only a response to the heavy burdens of college debt, but also helping students. According to EdAssist, an education based repayment website, polled that roughly 50% suggested they would delay purchasing a home or other financial investment because of their loans. Essentially, the constant burden of debt keeps them from making decisions for their future.
How many businesses follow in Aetna’s footsteps and the various others using this program remains to be seen. Yet, with tuition costs rising and high debt a reality for any graduate, company models like these will only surge in popularity.