From health care to transportation to education, voluntary staff attrition has become a big enough problem that HR teams are digging deep into their bag of tricks to attract and retain talent.
Some companies are even dangling the carrot of helping alleviate student loan debt, which seems to be charming candidates—and improving employees’ financial and emotional well-being.
A win-win for sure.
Student Loan Benefits Can Make an Employer More Competitive
Student debt is a hot subject, especially now that the national moratorium on payments has been extended only to May 1, 2022.
Young job seekers and employees who are nervous about having to resume those payments are most likely to take advantage of student loan benefits programs, such as assistance with pursuing loan forgiveness or cash offers to pay down student loan debt.
Employers can now provide up to $5,250 in tax-free student loan repayment benefits through 2025, thanks to recent pandemic relief legislation. Both the tax relief and subsidies have made this type of benefit appealing to employers wanting to stand out in a highly competitive job market.
Related Reading: Designing a Wellness Program for Multigenerational Workplaces
A More Attractive Alternative to Signing Bonuses
Student loan repayment programs are also a favorable alternative to other financial offers like sign-on bonuses that seem like a great idea … until those new employees jump ship as quickly as they onboarded.
A recent Society for Human Resource Management article highlighted this point and illustrated how valuable student loan repayment benefits can be. McLaren Flint Hospital was experiencing high turnover rates during the height of the pandemic and seeing no return from offering sign-on bonuses. They decided to pivot and fast-tracked a student loan repayment program that paid off in spades:
“McLaren Flint Hospital’s program provides $200 per month in student loan repayments during the first year after an employee signs up, rising to $300 per month the second year and $450 per month in the third year. The program has a $15,000 cap …
“The initial goal was to enroll 100 people for student loan repayment assistance and to retain those employees as long as possible. However, when the hospital announced the new benefit in December 2021, 172 of the hospital’s 1,100 employees signed up on the first day. These employees hold a wide range of jobs that can be difficult to keep filled, such as nurses, physicians, respiratory therapists and technical pharmacists.”
Employers aren’t alone in reaping the benefits of these programs. For employees, these programs can go a long way toward improving their wellness.
How Student Loan Debt Impacts Financial and Mental Wellness
Today’s graduates are stuck between a rock and a hard place when it comes to higher education and the job market.
A vast number of jobs require costly degrees, forcing students to take on huge loans (the average borrower owes around $30,000 after graduation).
Even if a graduate finds a job in their field of study, those jobs may not pay enough to make a dent in an employee’s student debt, especially once compounded interest rates come into play. Because entry-level jobs are typically low paying, many students spread their student loan out for a longer term to afford the payments, only to find themselves ultimately paying almost twice their original borrowing amount in the long run.
Even if an employee’s salary were enough to pay off their loan on a typical schedule, that’s money that doesn’t go toward their retirement accounts, quality-of-life expenditures … or the consumer economy.
Related Reading: 5 Ways Employees Can Manage Financial Stress
As a result, young people are experiencing levels of financial insecurity that their parents and grandparents never had to worry about.
Don’t believe us? Baby boomers collectively owned 21% of the country’s wealth by the time their generation reached a median age of 35 in 1990. When Gen X reached that median age? They owned only 9% of the nation’s wealth. The financial picture for millennials is even worse: The pressure and desire to buy a house and start a family are still there, but they may not have the financial means to do so without going into even more debt.
That burden is heavy. And because personal finances have traditionally been a taboo subject in the workplace, that financial struggle isn’t talked about much.
(Oh, and your fresh-faced Gen Z employees? Many of them are just starting their repayment period —and are realizing that co-workers old enough to be their parents are still paying off their student loans.)
By offering student loan repayment programs, you can create a corporate culture that welcomes discussions about finances, while offering benefits and programs dedicated to improving employees’ financial, mental, and emotional wellness.
How to Support Employee Wellness Beyond Student Loan Repayment Programs
Even if you help your employees pay down part of their student debt, the overall impact is lessened if they don’t have healthy financial habits.
Young employees need to have financial fluency for long-term financial, professional, and personal success. For example, your employees may have been led to believe they can’t put anything toward retirement investments and savings until they pay all their student loan debt down … which may be the right choice for one employee but entirely the wrong choice for another.
A wellness program that includes financial literacy training can go a long way to help each employee learn what financial choices are best for them.
When employees feel like they understand and are in control of their finances, they have less stress, are more productive, make better business decisions, and tend to have more loyalty to the company that helped them.
Related Reading: Benefits of Financial Literacy Education at Work
Another way to help employees is to offer financial counseling services.
If your company doesn’t have CFPs on staff who can provide guidance, consider partnering with a local financial planner to offer appointments and advice. Your insurance provider can likely help with that as well.
Not only will this put your employees on the right track, but it also does double duty by encouraging them to take advantage of any retirement benefits you offer.
Coaching and Counseling Services
To support your employees’ mental and emotional health as they work to gain control of their finances, encourage them to lean on wellness coaches, life coaches, or financial coaches (if you offer this benefit). Paired with financial training and counseling, a coach will help employees create a plan and stick to it.
Coaching or counseling sessions are where employees can put it all out there—their fears, concerns, goals and dreams. Simply verbalizing it all can start to reduce their anxiety.
Related Reading: Coaching and Your Corporate Wellness Program
Employees whose financial struggles have led to situational depression should have an outlet as well, whether it’s mental health referrals or a more convenient option, such as digital coaching and mental health services. Even creating a support group for employees with significant student debt can make a big difference. Just don’t be surprised by the number of employees who show up to the first meeting.
If your company is interested in discussing how to implement a student debt repayment program or other types of wellness benefits for your employees, reach out to talk with one of our experienced consultants. At WellRight, we’re here to help.