In the last few years, employers have stepped up in their attempts to help their employees address the challenges that they're facing with student loans. According to the Society for Human Resource Management, around 3 percent of employers currently offer some sort of student loan repayment assistance program and many more employers are planning to add the perk in the coming years.
These benefits particularly help millennial borrowers who have been graduating with overwhelming amounts of student loan debt and struggling to pay it off. But employers also benefit since their perks are relevant to their employees and that makes them more likely to help attract and retain great talent. In fact, 76 percent of those who responded to a recent American Student Assurance survey said they would base their decision on whether an employer offered student loan repayment benefits if all else was equal. Companies also benefit because they help to reduce the stress that many employees face because of their student loans. With less stress, employees are better able to function effectively in their positions.
Despite these great strides to help employees, these employers could be doing more in order to help their employees repay their student loans. In fact, student loan repayment assistance benefits are only one in a series of things that employers could be doing if they want to ensure that their staff can adequately deal with the challenges of repaying their large loans.
In addition to offering money to be paid towards staff’s student loans, employers should also consider educating staff members who have student debt about their student loans. Many borrowers don't understand their loans very well or what they can do to make repayment easier and ensure that they are on track to a better financial future.
Employers could offer educational opportunities for employees to ensure that they completely understand how to expedite their repayment. This could touch important topics like understanding how pre-payment works and how to decide which student loan repayment plan is right for you.
Information About Refinancing
Another thing that employers should be offering their staff is information about student loan refinancing. Student loan refinancing is a great way to reduce the cost of your loan and to potentially expedite the repayment process by reducing your interest rate. On top of this, you can consolidate student loans together, allowing for a simpler monthly payment.
Many people who have a good job and a high credit score are able to qualify for a much lower interest rate on their student loans by refinancing - which will allow them to repay their loans faster since more of their payment will be going towards the principal of their loans rather than the interest. Unfortunately, many student loan borrowers are unaware that they could qualify for student loan refinancing or the savings that it would provide them.
For this reason, these borrowers miss out on a great opportunity to save money and reduce the stress of their student loan repayment. By ensuring that staff have information about student loan refinancing, employers can better help facilitate their employees’ student loan repayment.
Another area that employers could help their employees is in broad based financial planning. Many students with student loans face challenges meeting all of their financial expectations. Some don't know how to budget or that it's important to also start saving for retirement while they’re repaying their student loan debt. Providing information sessions in which employees are taught about the benefits of saving for retirement early and how to make ends meet, even if their student loan payments, are high would be of great use.
Stress Management Techniques
Finally, one other way that corporations and companies can help staff members who have student loans is by providing them with stress management information and tips that will help them deal with the difficulties that they face as they repay their student loans. Having significant amounts of debt can be very stressful and this stress might affect the staff members’ job performance. By ensuring that staff know how to manage stress effectively, companies can give their employees peace of mind.
Why It’s Important
While you might think that these suggestions include things that companies don’t normally do to help employees, many corporations and companies already offer information sessions and professional development that is focused on personal financial goals and challenges. The problem is that much of this is targeted towards older demographics and doesn’t often cover topics like how to deal with significant student loan debt.
Companies that provides holistic options and strategies to help their employees deal with student loan debt are the types of employers that millennials will want to work for. These companies will also be better able to retain their employees, because they make it clear that they care about their employees.