Student loan contribution is a new benefit that’s being offered by a few companies nowadays. The benefits that employers commonly offer include 401(k), life, dental and medical insurance. However, this new trend in employee benefits given by companies attract more people. One of the financial concerns of many employees is paying off their student loans. There’s over $1.3 trillion student loans and it’s continuously increasing. Paying off this debt is something that employees need to do, aside from budgeting for their daily expenses. This is one reason why getting their own home or achieving their other plans are delayed.
As of now, only 3% of companies in the US are offering this student loan contribution benefit. The terms vary, but there’s usually a specific amount that companies contribute each month to help with the payment of student loans up to a maximum total amount. The employers hire service providers that take care of having the payment of the student loan processed. A small portion of companies may be offering it now, but it’s expected to grow in popularity in the coming years. While it may seem that it’s only the employees would benefit from this, employers could also get something from it.
Pluses of Student Loan Contribution Benefit
As mentioned, student loan is one of the things that employees are concerned about when it comes to their finances. Those who have student loans would need to make monthly payments of a certain amount for a specific number of years, until they are clear of their debt. This means that they don’t have all their income for their present needs and future goals. Those who have a huge amount of student debt and those who need to pay their student loan but don’t have high salary could have difficulties making ends meet. This could add to their stress, which in turn could affect their performance. With the student loan contribution, they wouldn’t be too stressed about their financial situation and this means that they could also focus more with their job and do their best with it.
Employees could also start to save money that they could use for emergency situations and for reaching their goals like buying their own house or vehicle. The monthly contribution that their employers would give would already be a huge savings for them. Instead of paying for it from their own pocket, their employers would shoulder a specific amount of their student loan payment.
Employees are not the only ones who would benefit from this as employers would too. It would be easier for them to find the best employees and keep them in the company because of their attractive benefits. Since this would also make their employees happy, they are more probably do better with their tasks.
While this has a lot of benefits, student loan contribution has a slight drawback. It’s not tax exempted so the employees would still need to pay for tax like it’s included in their regular salary. So overall, employees would not be getting the full amount of the contribution. What they would get is the amount after tax.
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2nd image courtesy of Mister GC at FreeDigitalPhotos.net