Are Student Loan Repayment Programs Ready to Take Hold?
Concerns about student debt — and its impact on the finances and retirement savings of workers, particularly younger workers — had spurred interest in student loan repayment programs. But are plan sponsors really interested in adding that benefit — and are workers seeking it?
In response to questions from its members on the topic, the Plan Sponsor Council of America (PSCA) conducted a brief snapshot survey of its members
from April 12 to April 28. A total of 149 responses were collected. Respondents represented organizations of diverse sizes and industries.
Of those responding, one-fourth have fewer than 50 eligible participants and one-fourth have 5,000 or more.
A strong majority of respondents (70.1%) reported providing a tuition reimbursement program for active employees, but very few (1.4%) reported offering a student loan repayment program to new hires. The latter are programs in which the employer provides some type of contribution to repay student loan debt, or at a minimum facilitates some type of repayment program is a relatively new concept, and one that has been garnering some headlines of late.
Interest in employer-sponsored student loan repayment programs appears to be growing, according to the PSCA snapshot – in particular among larger organizations, where one in five companies with 1,000 to 4,999 employees, and 22.6% of those with 5,000 or more workers, expressed interest. Interest was greatest among technology or telecommunications companies (20%).
That said, most have no plans to introduce such a program: 59.7% overall said they were not considering adding a student loan repayment program, in contrast to the 11.5% who said they were considering the addition. However, nearly 29% said they were not sure.
Nearly one-fourth of large companies address student loan debt with employees in some way, with 15.8% of all plans doing so, though industries with a higher portion of employees with a college degree, such as technology and services, report addressing student loan debt more so than other industries such as retail and manufacturing.
Although PSCA lacks prior data to determine the trend in companies reporting questions about student loan debt benefits from new/prospective hires, the implications of the responses from the inaugural survey is that either relatively few new/prospective hires inquire about student loan debt repayment programs in the interviewing process (6.9%) — though PSCA acknowledges that the respondents to the survey may not be adequately involved in the hiring process to comment (36.1% were unsure).
Interestingly, the number of respondents indicating that existing employees are seeking student loan debt relief is noticeably higher than those who had inquiries from new/prospective hires (6.9% of new/prospective hires v. 10.8% of existing employees).