What do student loans and employee benefits have in common? They both form the basis of one of the hottest trends in employee perks for millennials. As we have written about before, student loan debt is poised to be the next “bubble” in the economy as more millennials join the workforce. While this group of employees may not know it yet, paying off their student loans is likely going to become a burden to many of them when they put down their avocado toast and think about buying a house or supporting a family. Student debt levels increased by 3% nationally in 2015 and are expected to keep rising as millennials finish their formal education and enter the workforce.
Some private employers have realized that money paid directly for student debt relief can be a powerful recruiting and retention tool. Last week, the City of Memphis became the first widely publicized public sector employer to offer this benefit as well. The City announced it will contribute $50 a month to the student loan account of any employee who has worked for the City for at least a year. The benefit will be available beginning July 1st, and will be managed by administrator Tuition.io. While $50 a month towards student loans may not seem like much, it does recognize not only the burden of this type of debt but also the value of workers who have these loans. Some forward thinking employers see it as an extension of their tuition reimbursement program, with the tuition being paid by the employee before they were hired. The result is still a more educated or trained workforce.
The changing face of the workplace requires employers to rethink their best recruiting incentives. With more students pursuing and more employers requiring graduate degrees, the workforce will be more and more weighed down with student loan debt. Smart employers will look for ways to ease that load and recruit and retain the best employees.