People often mock millennials for living at home longer and staying on their parents' healthcare plans well after college. Millennials tend not to own homes and often drive used cars. While many blame millennial laziness for this state of affairs, the truth is that millennials wrestle with a problem no previous generation has had to deal with: massive student loan debt. Seven of every 10 college seniors graduate with student loan debt, and two members of Congress have had enough.
U.S. Representatives Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) joined with student loan benefit provider Tuition.io to propose a bill to combat this problem. H.R. 795, or the Employer Participation in Student Loan Assistance Act, would allow employers to take advantage of a tax-free benefit, similar to tuition assistance, to help employees pay down their student loans.
"Never before has such a large percentage of the under-35 workforce been burdened with levels of debt from their education that have a direct impact on their ability to pay their bills, save for retirement, and stay in the jobs they love," says Jen Bailey, director of business development for Tuition.io.
Bailey points out that the financial stress of student loans leads to disengagement in the workplace: "More than half of millennials are stressed about their finances, and 37 percent say they are distracted at work because of it. Employers who understand the importance of this issue to the workforce understand its implications for their talent strategy."
As millennials come to make up the largest portion of the multigenerational workforce, companies that ignore their needs do so at their own risk.
"Any forward-thinking company that wants to attract this talent pool needs to understand what this generation wants and adapt accordingly," Bailey adds.
Investing in Employee Peace of Mind
Studies show millennials value student loan repayment assistance over most other benefits.
"Offering student loan repayment as a benefit is a smart, positive investment for employers to make," Bailey says. "In addition, employers can make a meaningful impression by addressing the needs of professionals through all life stages."
Whether employees are starting their careers, paying off student loans, preparing to buy homes, planning to start families, or saving for retirement, employers can help.
Unfortunately, being buried under student debt means entry-level workers today can't afford to take critical life steps at young ages the way their parents did.
"Young professionals are putting off buying homes and cars [and] saving for retirement and are less likely to start new businesses because of the burden of their student loans," Bailey says. "The impact of loan repayment is highly tangible, and its value is immediate and ongoing. Employees get to see their levels of debt reduced every month. By providing a benefit that employees can see and feel every day they come to work, student loan assistance is a powerful new weapon in companies' arsenals to improve employee acquisition, engagement, and retention."
Companies that expect to compete for top talent can't afford to ignore this need in their employee population.
"In every industry, as the competition for top talent becomes more extreme, any opportunity to stand out as an employer of choice is valuable and may mean the difference between winning or losing that next key hire," Bailey says. "While student loan repayment assistance is a relatively new benefit, the early results point to a significant increase in retention."
Eighty-six percent of employees say they'd stay at least five years at a company that helped pay off their student loans. Bailey says that organizations that now provide student loan assistance, like Fidelity, Staples, and Live Nation, "are experiencing strong participation rates and positive feedback from employees and HR professionals alike."
The Employer Participation in Student Loan Assistance Act
If passed, the bill would make it easier for companies to offer student loan repayment to their workforces. The bill would "extend the tax exclusion for employer-provided education assistance to include payments of qualified education loans," Bailey says.
"There has been a groundswell of rising interest in and support for employee student loan assistance as a way for today's employers to increase employee retention and engagement," Bailey says. "Adding tax relief to the equation could elevate student loan assistance alongside 401(k) contribution as one of the most valuable financial benefits a company can offer its workers."
As of publication time, H.R. 795 has been sent to the House Committee on Ways and Means for consideration.