New Benefits Target Employee Debt
By Geoff Mukhtar, Communications Manager at United Benefit Advisors
Today, most new full-time hires expect a company to offer certain standard benefits – health, dental, vision, and life insurance, paid vacation and sick days, and a 401(k) or pension. Some companies go beyond this and provide other benefits such as profit sharing, parking reimbursement, mobile phone reimbursement, wellness programs, and even on-site daycare. So what does the future hold for employees when it comes to their expectations of a traditional benefits package?
In an article titled, “Student Loan Repayment Programs Are ‘The Next 401(k)’” on the website Employee Benefit News, it claims that the next big thing in employee benefits is student loan repayment. In fact, they view this as not just a fad, but something that will stick given the high cost of tuition and its appeal to everyone in the workforce. Yes, you read that last part correctly. You may think that tuition reimbursement would only be an attractive benefit to those who are just entering the workforce, but people older than 39 currently have 35% of all student debt. Plus, graduate programs may be covered and so might be loans taken by parents to help pay for their kid’s education.
As of 2015, based on data from the Society for Human Resource Management, only about 3% of employers currently offer the benefit, but that’s expected to increase sharply. According to the article, the reason is that tuition reimbursement is a concept you don’t have to “sell” to decision makers like you would a complicated health plan. They already know today’s graduates are struggling to repay their student debt.
A side advantage of adding tuition reimbursement to a company’s benefits package is that, by removing the stress of repaying a student loan, employees will be more apt to contribute to their 401(k) or other corporate retirement plan. As companies look for ways to differentiate themselves when recruiting new employees, this benefit appears to have significant traction.