Employers add student loan payments to job perks
- A number of companies have begun offering to make payments on their employees’ student loans as an incentive they hope will help with recruitment and retention of younger workers who are increasingly strapped with debt.
- The New York Times reports that Fidelity announced the new perk — up to $2,000 per year, per employee with a $10,000 cap — and companies that handle the benefit say demand is rising, with one firm expecting to sign on 100 new employers this year.
- Younger workers are responding more positively to the loan help than retirement benefits or other perks, and pending federal legislation could make the benefit easier to offer by providing tax breaks on the contribution, or allowing employer payments to be made entirely tax-free up to a certain limit.
The problem of student loan debt is affecting the U.S. economy at multiple levels. The latest generation of college graduates is holding off on their retirement investing and home or car purchases. They are thinking differently about their job search. Some experts even believe student debt could follow mortgage debt as the next major contributor to an economic crisis.
Higher education institutions might consider lobbying for the tax benefits for such employer contributions to student loans. These proposals are working their way through the House and Senate with bipartisan support. If student debt becomes more manageable, it will take some of the heat off individual colleges and universities, which have been blamed for raising tuition faster than inflation and limiting the economic return on a college education.
- The New York Times Medical, Dental, 401(k)? Now Add School Loan Aid to Job Benefits
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