Best Perk Ever? Some Employers Now Offer Student Loan Repayment
By Jen Hubley Luckwaldt
If someone asks you how much you get paid, you probably answer with a dollar amount (or politely ask them to mind their own business). But the real value of your compensation comprises more than just the numbers that appear in your direct deposit at regular intervals. Perks like health insurance, 401(k) match, bonuses, and so on, save you money or make you money and contribute directly to your bottom line. Now, a few companies are introducing what might be the ultimate money-saving perk: cash to repay student loans ahead of schedule, thus potentially saving employees thousands in interest.
"PwC will contribute about $100 a month towards an employee's student-loan principal for up to six years, for a total payout of $7,200," writes Bourree Lam. "Since paying off loan principal will reduce interest, the company estimates that the benefit is actually worth up to $10,000."
The company is the first client of a new startup called Gradifi, which helps companies develop loan repayment programs, offering a platform for administering the benefit and verifying that the money offered goes to repay loans. Once employees sign up for the program and grant permission for them to do so, Gradifi pays off their loans using PwC's contributions, which are taxable as income.
"While we know that no organization can singlehandedly take on the issue of student debt, it's an area where we believe we can and should make a difference," said Tom Codd, vice chairman, US Human Capital Leader, PwC, in a press release. "We all have a stake in helping young people build healthy financial futures faster because that in turn allows them to contribute to our communities and society more broadly."
Codd notes that PwC hires 11,000 students off campus each year, and that 71 percent of students now graduate with loans. Student loan debt in the U.S. reached $1.2 trillion in 2015.
If you're not a current or future employee of PwC, don't despair: companies like SimplyCast and CommonBond are already offering student debt repayment programs, and Fidelity Investments and Natixis Global Asset Management have programs launching next year. In fact, the Society for Human Resource Management says that 3 percent of private businesses now offer student loan repayment benefits.
Gradifi says that they're seeing a lot of interest from other companies who want to develop benefit programs like the one they created for PwC.
"We have almost 100 companies right now on our waiting list for next year to launch," Gradifi chief executive Tim DeMello told The Boston Globe. "It's really become something that's gathered a lot of steam."