Would millennials want to work for a company that paid off their student loans?
For plenty of college grads with heavy debt loads, the answer is a resounding “yes.”
PwC, formerly known as PricewaterhouseCoopers, has a popular loan-offset program for employees: PwC pays part of their student loans as a benefit, offering $100 a month in loan payments for up to six years. That can cut loan principal and interest by as much as $10,000 and shorten employees’ debt-payoff period by up to three years. About 8,700 PwC staffers are currently signed up for the benefit and 8,069 are receiving payments. Since launching the program in 2016, PwC — among the first large companies to tackle the student debt issue via loan repayment — has paid off $25.9 million worth of workers’ debt.
Julie Schenck, an accountant with PwC’s mergers and acquisitions division in McLean, Virginia, finally paid off her entire $3,000 student loan in April after starting a $100-monthly payment plan through work.
She now recommends PwC’s benefit program to other new employees. “I always make sure to ask if it’s something that impacts a new employee, they should get it (the student loan offset) started,” said Schenck. “It really is easy to set up. And you see it coming straight out of your paycheck” directly to the lender. “No one ever says ‘no, thanks,’ because it’s such a great benefit.”
Healthcare giant Abbott offers a similar benefit. Its Freedom 2 Save program helps employees pay down student loan debt while also saving for retirement. The company changed its 401(k) plan to contribute to the retirement accounts of employees making payments on their student loans. If employees pay at least 2% of their salary toward their student loans, the company will contribute an equal amount to their 401(k) accounts.
And at Sotheby’s, when full-time U.S. employees with qualifying college debt make a loan payment, the international auction house will contribute $150 toward the loan principal, up to $1,800 a year. Sotheby’s partnered with Gradifi, a financial employee benefits firm, to create the plan.
Programs like these are becoming a more common benefit among employers. While these are available to employees of any age, they’re especially a boon to young American workers saddled with college debt, which has exploded to $1.5 trillion.
“Millennials have more debt than any prior generation,” says Jon Stein, founder and CEO of Betterment, a financial planning firm and robo-adviser that has expanded into 401(k) retirement plans for businesses. “Some companies are thinking they want to provide debt pay-down in addition to retirement savings. It’s a growing trend.”
Born between 1982 and 2000, millennials earn an average income of $50,406, about 20% less than baby boomers earned at the same stage in life. Yet, they also are increasingly caring about benefits and culture in addition to salary, said Aileen Alexander, who heads the Philadelphia office of Korn Ferry, the executive search firm.
Millennials are now the largest demographic in the U.S. workforce, surpassing the number of baby boomer workers, according to Wells Fargo, so employers are embracing amenities and new benefits to remain relevant.
“Organizations are getting increasingly creative with attracting talent,” including offering remote-work options, on-site game rooms for Ping-Pong, and health and wellness programs “whether in the form of yoga breaks, gym memberships, smoothie shakes, or birthday holidays,” Alexander said. She knows of one company that, instead of offering tchotchkes to potential hires at job fairs, instead will ask them to choose three nonprofits to which the company will give donations “even if they don’t end up working there.”
Urban Outfitters not only offers “bring your dog to work” as a benefit, but discounted pet insurance. And Sweetgreen, the healthy foods and salad takeout chain, recently announced that it is giving mothers, fathers, adoptive parents, and foster parents five months of paid parental leave.
“We believe it’s our responsibility to lead the way given the U.S. is one of the few countries that does not mandate any paid leave for new parents,” the company said.
Meanwhile, the popularity of a student-loan payment program is likely to keep growing, among workers of all ages. According to a 2018 survey by CommonBond, 78% of employees with current or future student loan debt want their company to offer this benefit, and 65% of employees ages 55 and also want the same opportunity.
“We’ve learned that student loan debt affects a much larger proportion of the workforce than previously realized,” said Leigh Gross, CommonBond’s vice president of partnerships.
Financial wellness programs that feature student loan benefits can increase employee engagement and retention, regardless of age group, the survey reveals. But for millennials, such programs can make all the difference in where they choose to work.