Student loans are one of the hottest topics dominating the news, media, and overall mindshare of society right now. Presidential candidates are all laying out their plans for student loan forgiveness, repayment, and free tuition programs but something still has not been done. There is all of this chatter around the $1.6 trillion in student debt from 45 million borrowers, but the reality is day after day those borrowers are accruing a crippling amount of interest that perpetuates a cycle of never-ending debt.
On the flip side, with the hottest job market in recent decades, companies are scrambling to hire & retain talent quickly enough to keep pace with their growth. For retention, the obvious thing to do is invest in your employees so they feel valued and for attraction, the obvious thing to do is to differentiate yourself in some way from talent competitors. According to Willis Tower Watson, only 4% of Employers offered Student loan benefits in 2018, but that number is expected to octuple (increase by 8 times) by 2021 to 32%.
One large trailblazer in the space has been Fidelity Investments, who has been offering a student loan repayment perk to their employees in 2016. Overall Fidelity has seen a 75% reduction in turnover from first-year participants and benefited from longer average tenures of employees enrolled in the program.
If we do some rough back of napkin math, we can quickly show how a boost in retention can have significant business impacts. According to Employee benefits news, “it costs as much as 33% of a worker’s annual salary to replace” and with the average full-time salary in the US being $44,720 (according to the Bureau of Labor Statistics), that means it costs on average $14,757 to replace a full-time employee. If you employ 500 people and have an average attrition rate of 15% (more conservative than the national average of 18%), this employer would be spending $1,106,775 just on hiring and training new hires. As you can see, any decrease in turnover will lead to serious cost savings.
Employers are starting to take a more active role in the financial wellness of their employees and that includes helping them get out of debt faster. To stay up to date with benefits trends and student loan benefits specifically, click here to follow our blog.
Interested in joining the hundreds of companies that are helping employees pay off student loan debt? Reach out to me at [email protected], I’d love to introduce you to our solution!