Do You Have Student Loan Repayment At Work?
Anyone who still owes money from college is interested in every possible type of student loan repayment. Having a degree is great and can often open doors in your career that would be closed to you without a degree, but for many paying back that debt seems like a never ending battle.
There is a new trend on the horizon among company’s to help their employees get out from under that old college debt with student loan repayment as part of their benefit package. Here is an excerpt from a recent Forbes article explaining this new hot trend that could save you thousands on your student loan debt!
If your company only offers a 401(k), health insurance and a flexible vacation schedule, then you’re missing out on the hottest employee benefit of 2017: student loan repayment assistance.
To attract and retain millennials, in particular, companies are expanding their employee benefit programs to help reduce student loan debt for their employees. Millennials are heeding the call.
Aetna is one of 10 trailblazing companies offering the hottest employee benefit of 2017. (AP Photo/Jessica Hill)
In the 2015 American Student Assistance survey, 76% of respondents said that if a prospective employer offered a student loan repayment benefit, it would be a deciding or contributing factor to accept the job.
While only 4% of companies currently offer such a benefit, according to the Society for Human Resource Management, and employees are typically responsible for income taxes on the assistance received, expect this percentage to increase in the coming year.
Expect this benefit to spread to other companies that want to recruit and retain a loyal employee base. It’s employee-centric. It’s forward-thinking. It’s solution-oriented.
And it’s one step in the right direction to help address a $1.3 trillion issue affecting over 40 million borrowers. – Forbes
How Does Student Loan Repayment Work As A Benefit?
These student loan repayments plans can be structured in many different ways. The company determines how their benefit will work. Here is a look at some of the important things you need to know.
What You Need to Know About the Benefit
Payments to employees’ student loan accounts are currently considered income, so you’ll have to pay taxes on the benefit.
There may be a way around that, however. Student Loan Genius this summer rolled out a new component of its platform that allows employers to match employees’ student loan payments with non-taxable contributions to their retirement accounts. Young employees like the option, because they don’t have to choose between paying off their student loans and saving for retirement, Aguilar says.
Employers can choose how they want to design the benefit, whether it’s capped at a set amount, like $1,000, or whether it’s tied to a percentage of income like traditional 401(k) match programs.
With benefits administrators such as Gradifi, Student Loan Genius, Tuition.io, and SoFi, employer contributions are sent directly to an employee’s student loan servicer, making payment seamless for employees after they sign up.
Some employers offer monthly payments, others one-time lump sums, and payments can be used to pay down private or federal loans. Some companies design their benefit a matching contribution, so employees need to check whether they have to continue making their own payments in order to receive it. The benefit can be restricted in other ways, too. Aetna, for instance, offers up to $2,000 in matching payments to any employee, but only if he or she earned a degree within three years of applying for its match.
The benefit is almost always tied to an individual’s current student debt and cannot be applied retroactively. That means if you’ve already paid off your debt, then you can’t take advantage of it. That aspect—that employees who don’t have student debt aren’t gaining anything from the benefit—is one of the few criticisms of the emergence of student loan repayment assistance. Company executives and human resources experts, though, argue that’s the case with other types, too, including gym memberships and transportation discounts. – Time Money
Do you have student loans to repay?