Millennials age 19 to 29 now hold more than $1 trillion in debt, and employers looking to recruit and retain young professionals are taking note. Data released at the end of 2018 by the New York Federal Reserve Consumer Credit Panel showed that student loans not only accounted for most of this age group’s debt (mortgage debt makes up the overwhelming majority of consumer debt when considering all ages) but also is growing quickly. Bloomberg points out that student loan debt grew by 102 percent since 2009, while mortgage debt increased by just 3.2 percent.
Employers see opportunity to relieve debt while boosting retention
With millennials so heavily encumbered by student loan debt, “that financial pain is also creating a recruitment opportunity” for some employers willing to help repay their workers’ student loans, NPR Morning Edition reports.
Only 4 percent of employers surveyed by the Society for Human Resource Management currently offer student loan repayment benefits, but the model is gaining traction as companies see the advantage it confers for recruitment and retention. Fidelity Investments, for example, offers up to $10,000 in loan repayments across five years and says that more than one-fourth of employees now participate in the three-year-old program.
Programs poised for growth?
NPR cites several factors that could potentially limit the proliferation of similar programs, including the lack of a tax incentive, since the loan repayment is taxed as income for both the employer and employee. Workers who take advantage of these benefits—many of which have repayment requirements if employees resign before a certain date—also may feel forced to remain in a less-than-ideal job for longer than they would otherwise.
Still, advocates say the loan repayment programs are worthwhile. “Millennial turnover is different than any other generation before, and if I’m able to recruit somebody based off this benefit and then retain them for 12 or 24 months longer, then I’m getting a reward out of that,” Kim Wylam, a managing partner at Baker Tilly’s human resource consulting group, told NPR.