The popularity of student loan repayment assistance benefits has grown in the past year, and multiple service providers have emerged to provide this benefit to companies. Many employers see this as a new benefit to attract the millennial workforce, and some see it as the biggest potential HR benefit since the 401(k) program was passed by Congress in 1978.
For some student loan borrowers, this can’t come soon enough. The amount of outstanding student loans in the US has more than doubled in the past ten years, and currently sits at more than $1.3 trillion.
First Republic Bank acquires early benefits provider Gradifi
One of the first companies to provide student loan benefits to employers was Gradifi. Their initial employer partnership was with the massive accounting firm PricewaterhouseCoopers. Through this program, PwC provides eligible employees $1,200 per year in student loan payment contributions for up to six years. It garnered a lot of press, and Gradifi has since expanded this benefit to more than 20 other employers. First Republic Bank moved quickly on this trend and acquired Gradifi this past December to enhance their own student loan offering.
More companies have emerged to provide this benefit to employers
Tuition.io is another platform that provides student loan benefits to companies. Through their partnership with Fidelity Investments, employees can get up to $2,000 per year in student loan payments from Fidelity for up to five years.
Although only a handful of early adopters are providing this benefit to their employees, the space is already crowded with service providers to facilitate these payments for companies. In addition to Gradifi (now part of First Republic Bank) and Tuition.io, other startups have emerged to offer student loan repayment software to employers. These include PeopleJoy, Student Loan Genius, FutureFuel, and IonTuition.
Student Loan Refinance giants SoFi and Commonbond join in
Building on the momentum for this benefit, student loan refinance leaders like SoFi and CommonBond have also entered the space last fall with SoFi at Work and CommonBond for Business, respectively. They see this as a way to complement their other products and attract more borrowers to refinance their loans.
Employers are waiting on Congress to provide tax benefits
These benefits could be enhanced even more with a bill introduced through Congress in February. The bill, H.R. 795, Employer Participation in Student Loan Assistance Act, could accelerate the adoption of student loan repayment benefits among employers. This bill would make employer contributions to student loan payment tax deductible, up to $5,250 per employee per year. However, a similar bill was introduced last year, and did not make it through.
Many Employers are still treading cautiously
Some see this as the next big trend, and student loan companies are lining up to provide this service. However, many large employers are still treading cautiously. Some worry that employees may see it as an unfair benefit to those without student loans. Others are waiting for Congress to take action in order to receive the tax benefits from the bill. It will definitely be interesting to observe.
Don’t wait for your employer to start saving on your student loans
This type of benefit could play a big role in reducing America’s ballooning student debt problem. I’m sure more HR professionals will be hearing from both the benefit providers and their own employees who have student loans about providing this benefit. In the meantime, if your company doesn’t offer this benefit, don’t wait to take matters into your own hands. You can use our decision tool to find the best repayment plan and compare refinance options to start saving on your loans right now.