It would be nice if employers could set up a standardized benefit package that appealed to all employees across all demographics – but the reality is that one size doesn’t fit all. These days, many older employees are delaying retirement and there’s a strong influx of talented young employees entering the workforce. Employers are increasingly customizing their benefits to appeal to the diverse needs of these demographics.
One of the shifts in thinking that has occurred in recent years, especially among private sector employers, is an awareness that student loan debt has become such a largescale financial burden. So much so that employers with the resources to offer debt relief stand to gain loyalty from existing employees and an edge in recruiting over competitors.
Unlike tuition reimbursement (which helps offset the cost of tuition for active employees), any dollars provided by employers that offer any level of student loan repayment are considered taxable income. To date, attempts to make this new type of employee benefit tax-advantaged for employees and/or employers have yet to succeed. However, the scale of student loan debt is so vast, more employers are likely to pursue this benefit – even without the tax advantages
The weight of carrying student loan debt has only grown since my time as a student. Today, the news routinely carries stories about people in their 20s and 30s who are so severely burdened by their student loans that they’re unable to save for a home or many of the other expenses that accompany starting a family.
Traditional benefit planning overlooks this very real pressure point on younger employees. Instead, employers tend to focus on quality health plans and a strong match to the company’s 401(k) plan, which is just fine for many of the established, older employees.
Employers competing for younger talent are beginning to recognize that expensive health plan and rich retirement benefit contributions are income that these employees simply can’t part with when there are huge student loan repayments in the forefront.