Recent graduates looking to have their boss pay off their student loans now have another place to look for work.
Natixis Global Asset Management will give employees up to $10, 000 over their career to put toward their student debt, the private financial services company announced Tuesday. The firm is one of a growing number of employers, ranging from tax and consulting giant PricewaterhouseCoopers to a Nevada brothel, to offer the perk amid rising levels of student loan debt.
Ed Farrington, Natixis’s executive vice president for business development and retirement, said he first came up with the idea for the perk after a student approached him at a speaking engagement at his alma mater to express his disappointment with the fact that so few companies offered to help employees with their student loans.
“(Student debt) is becoming such a big issue that more and more employers will look to provide a benefit because I think it will become something that the younger generation asks about, ” he said. Farrington said he’s hopeful the perk will become as popular with employers as the retirement benefits that are the focus of his job.
Though student loan borrowers, particularly younger employees, appear to be clamoring for help from their employers to pay off their student loans, they should make certain that the perks don’t come at expense of their wages, said Rohit Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau. In addition, he notes that any payment toward a student loan from an employer is treated as income for tax purposes so the benefit isn’t totally free to borrowers.
There are other steps businesses could take to help borrowers with their student loans that may be more advantageous from a tax standpoint for borrowers, Chopra said. Companies could arrange with a lender to help employees refinance their private student loans at lower interest rates - something that some firms already do with mortgages. They could also simply do more to help borrowers navigate the student loan repayment system, Chopra said.
“I hope that every HR orientation will one day include information about how to take advantage of student loan repayment benefits, ” he said.
Right now, just 3% of employers offer company-provided student loan repayment, according to a 2015 survey of benefit offerings from the Society for Human Resource Management. But announcements like Natixis’ indicate that number is poised to grow. In fact, Boston-based startup, Gradifi, is betting on it. The company launched a platform earlier this year that companies can use to securely and directly pay off their employees’ student debt.
It appears the demand is there. Nearly half of student loan borrowers would prefer a benefit plan with loan match to one with a 401(k) match, according to a recent survey by ionTuition, a company that helps borrowers manage their student loan payments. In fact, 55% would prefer a loan match to health-care benefits, the survey found.
Companies that offer to help their employees pay off their debts could keep valuable workers around longer. At Natixis, workers have to be at the company for five years to qualify for any student loan reimbursement. At that point they get $5, 000 to put toward their debt and then can qualify for another $1, 000 a year for the next five years they stay on after that. In 2015, college graduates left school with $35, 051 on average, according to Edvisors.com, a financial aid website.
All of the approximately 525 workers at the company are eligible to receive the perk, even those who put in their five years before Tuesday’s announcement, as long as they show paperwork proving they have a student loan. However, the benefit can only be used to pay off federal student loans.
“We’re a company that relies on innovation and in order to keep that edge we do know that we have to attract and retain the best and brightest young people we can, ” Farrington said. “This benefit helps us accomplish that.”