Private Sector Jobs That Can Help Repay Student Loan Debt
When Christopher Webb, CEO of Los Angeles-based online ordering and restaurant marketing platform ChowNow, announced a new company 401(k) at the office holiday party last December, the news earned some applause.
But when he revealed that the startup would help employees repay their student loans, "Well, more people clapped for student loan repayments," says Webb, whose company implemented the program in January.
Employer-assisted student loan repayment programs among private firms, while still uncommon, are gaining attention. The U.S. branch of accounting firm PricewaterhouseCoopers made headlines this fall when it announced that it will contribute up to $1,200 per year to eligible employees' student loan bills.
"This is one area in which we hope others become 'fast followers,' providing a valuable benefit to their employees," wrote Robert E. Moritz, U.S. chairman and senior partner of the firm, in a blog post.
This news came after Chegg, an education company, announced in April a plan to assist employees with debt repayments.
[Avoid becoming one of these 10 scary student loan statistics.]
But while loan assistance seems to be gaining traction, it's still a "niche benefit," says Lenny Sanicola, senior practice leader at WorldatWork, a nonprofit human resources association.
For graduates who'd like their bosses to offer student loan help in addition to vacation days and health insurance benefits, here's what to know about this type of program.
-- What it is: Workers in jobs that benefit the public interest have had access to loan payment benefits for years, including loan repayment assistance programs, called LRAPs, and public service loan forgiveness. The private sector, on the other hand, has been slower to adopt this benefit.
[Discover more methods of student loan forgiveness.]
Just 3 percent of firms provided student loan repayment, according to the Society for Human Resource Management's 2015 Employee Benefits report. "It's too early to tell if it's a trend," says Bruce Elliott, manager of compensation and benefits at SHRM.
One thing to keep in mind, says Elliott, is that this benefit is as valuable to companies as it is to employees. For these organizations, touting a student loan repayment program is a chance to recruit -- and keep -- talented young workers.
Employers are "not doing it to be nice. This is absolutely an investment for them," says Elliott.
PwC, which hired 11,000 new graduates from colleges last year, for example, may find that student loan repayment makes a powerful pitch to potential hires during campus career fairs. ChowNow's Webb says this benefit appeals to his approximately 90 employees, who tend to be in their late 20s or early 30s.
-- How it works: So far, student loan repayment programs vary by company. The PwC plan will dedicate up to $1,200 per year for up to six years directly toward student loans for eligible workers. This extra contribution could help cut employees' student loan bills by as much as $10,000, according to PwC.
ChowNow's student loan match operates more like a 401(k) for student loan debt, says Webb, since it provides a company match -- but no tax benefits. "Like a 401(k) program, we can set a maximum amount." The company currently caps contributions at $500 per year but plans to increase that to $1,000.
Chegg's program covers $1,000, less taxes, for full-time employees. "We're all looking for ways to attract good talent," says Esther Lem, chief marketing officer. "There's no match or minimum payment."
-- Who will offer it: While this benefit is still rare, 100 companies are signed up to begin launching programs in January with the platform PwC uses, called Gradifi, Inc, says Tim DeMello, founder and CEO.
While he declined to name them, DeMello says, "They include everything from tech companies to Silicon Valley financial services, New York banks and advertising agencies."
[Know these facts about employer tuition benefits for college.]
Other experts expect that this will stay within a small group of companies. After all, Chegg is an education company, with an eye on college affordability. PwC hires thousands of college graduates each year. ChowNow is a young startup, with young employees. It may make more sense for them than for a corporation with a worker population that skews older or tends to lack college degrees.
"At this point, I would say that I don't expect it to become mainstream," says Sanicola, of WorldatWork. "If my workforce is a mix of demographics, then I still may offer that benefit. But it may not be as enticing as if I'm hiring 11,000 millennials per year."
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
More From US News & World Report
