🔒Wooing Talent: Companies offer student loan repayment to attract Millennials

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Robert Syc said he's never had a job where his employer offered to help pay off his student loan debt. Until now.

Syc works at Foley, a Hartford company that recently announced it will pay $1,000 a year toward an employee's student debt for as long as the employee works there. There's no payment cap.

“It's an incredible opportunity,” said Syc, 27, who works in drug and alcohol testing compliance at Foley, which provides compliance, financial and insurance services for the transportation and employment industries.

Companies for decades have offered tuition-reimbursement programs to employees seeking higher-level degrees that groom them for future management positions. But paying employees' old student loan debt is a much rarer benefit.

A rare benefit

In fact, only about 4 percent of companies offer a student loan repayment program, according to a Society for Human Resource Management (SHRM) survey, up from 3 percent last year.

But that's a number SHRM expects to rise.

Foley, for example, launched its program in May.

“It makes us stand out,” said Richard Pummell, vice president of operations at Foley, which is based in the Colt Armory and has about 135 employees in Hartford out of about 180 nationally and is actively hiring. “And then when we're on campus recruiting, it's very appealing to be able to say, 'Hey, we'll pay off all of that debt that you're just about to start repaying.' ”

Student loan debt is one of the biggest stressors for college graduates, so offering an avenue to repay those loans is a significant recruitment tool and a way to retain employees, said Jillian Doll, Foley's head of talent acquisition.

It's important to Foley for employees to be less stressed at work, said Doll, whose company has foosball and ping-pong tables in its break room. If they're less stressed, they'll perform better and be happier, the company and its customers will be happier, and the company will benefit, she said.

No downsides?

The program has an annual cost of $1,000 per employee, “but when it comes to retaining our employees and recruiting top talent, it's worth the money,” she said.

Pummell doesn't see any risks to the program.

“We truly see this as an employee benefit that only has upside,” he said. “We hope to be in a situation where we make a significant annual payout, as it will be an indicator of retaining a qualified and loyal workforce.”

Millennial recruitment tool

Bruce Elliott, compensation and benefits manager for Alexandria, Va.-based SHRM, said all signs point to the student loan repayment benefit gaining traction among employers.

Millennials are graduating with an average of about $35,000 in student loan debt, Elliott said, citing a U.S. Treasury Department figure. They have about four loans outstanding and are getting starting salaries of about $45,000 in humanities fields and $65,000 in STEM fields, he said.

Graduates' debt-to-income ratio indicates that student loan repayment benefits are important to Millennials, Elliott said, referencing survey data from EdAssist.

“They're finding that about half of the respondents to their survey are really expecting this type of help from their employers,” he said. “So taken altogether, I can absolutely see where this is the beginning of a trend and that we're going to see an expansion of this type of benefit.”

Not just Millennials

Millennials aren't the only ones that benefit from such a program. About 30 percent of Generations X and Y still have student loans outstanding, Elliott said.

Other companies with a Connecticut presence are also offering the perk. PwC LLP, for example, last September began offering a $1,200-per-year benefit for up to six years, and Fidelity earlier this year launched one paying $2,000 a year for five years, Elliott said.

“Even within this benefit, we're starting to see a little bit of competition and a little bit of uptick in the richness of the benefit,” he said.

Interest savings

According to a 2016 NerdWallet study, “undergraduate student debt holders could shave off nearly three years of payments and have $4,100 cut in interest from what they owe by taking advantage of a typical employer contribution program.”

That shows, Elliott said, that the benefit is more than the annual payment; it's also the overall benefit and what graduates are going to save on the loans' interest expense.

Overall, retaining staff and talent is a major benefit of the program because turnover has a cost, Elliott said.

With Millennials now the largest share of the U.S. labor force and susceptible to job-hopping for compensation, “adding this type of a benefit and spreading it out over multiple years really does make sense if you're looking to actively engage and retain the talent that you have,” he said.

“ … The reality of the situation is that we're going to start to see much more flexibility in benefits because at the end of the day, it's much easier to cut a benefit than it is to cut salary,” he said.

Local attraction

Mark Soycher, an employment lawyer at the Connecticut Business & Industry Association who regularly speaks with CBIA member companies about employment law compliance and best-practice matters, including benefit strategies, hasn't had companies ask about the benefit, but expects more will explore it.

And they don't have to be large companies to offer a repayment program, as Foley demonstrated. When Foley was considering its program, it saw big companies like Fidelity were doing it, Pummell said.

“We thought, 'Well, you don't have to be large to do something good for your employees,' ” Pummell said. “So we figured we'd jump into it.”

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