Does Your Employer Offer Student Loan Repayment Plans? Start asking NOW!
Having a college degree today is a common requirement to get a job in today’s workforce, about 45 million people are on the hook for roughly $1.6 trillion in student loans. 70% of people experience stress around their finances. This stress pours over into our personal lives and affect our careers as well.
Companies are now offering Student loan repayment plans as a way to incentivize Millennials and Gen Z to work for their companies and also keep them there. About 8% of companies offer them today and even though at first glance that looks like a small percentage, it’s up from 4% last year with a new wave of companies adopting these plans later this year.
The way that these programs work is similar to how a retirement savings plan like a 401(k) your employer will contribute a fixed amount like $50-100 per month, as long as you make your payments on time, your employer will continue to give you this benefit.
Some companies that offer them have a lifetime cap, for example once they match up to $10k they wont do anymore, other companies may use a time frame limit, like up to 5 years so the terms are set by your employer. Prior to this year, if you were getting that incentive, the matching amount from your company was taxed like income from the IRS.
As of right now, part of the CARES Act that was passed as part of the Coronavirus stimulus package, any amount you receive from your employer towards your loans this year is exempt from taxes. And it’s largely believed that this will get adopted as a permanent strategy in the IRS code going forward although it’s not written that way currently.
If you have student loans, I would bring this up to your employer and see if they’ve been looking into adopting this policy. From research available, it seems like a large number of companies are looking to adopt this later this year and into next year. It doesn’t hurt to ask and also if you’re looking for new employment it’s something I would absolutely throw out there to find out more.
PricewaterhouseCoopers has already paid over $37 million on behalf of their employees as part of this program. Examples of large companies that are offering this incentive today are Estee Lauder, Penguin Random House, Hulu, Fidelity investments, Chegg which is an educational tech company. Create a payoff plan for yourself and keep this information on your radar and call HR and ask. Small companies are also offering this today but knowing their employees are looking for this could help push them over the edge to making it happen. You never know unless you ask!