My company typically hires interns, directly after graduation, from colleges all over the country. We hire technical degreed graduates, most with their Master’s degree, to work in a highly technical profession. The degree is required, and the skill sets they learn in college are the basis from which they are mentored into a licensed profession.
We all have heard anecdotally about student debt- how common it is- but I don’t often hear anyone discuss what we should do about it. Students “chose” to be assume the debt, so we are left with the assumption that it is up to the student to pay it off.
At my organization, our employees never talked about student debt. So, leadership was curious- is student debt really affecting our workforce? We sent out a questionnaire and discovered the following:
- 32 percent of all the employees in our firm have some form of student debt.
- 50 percent of those under the age of 30 have student debt.
- The average amount of student debt is over $50,000
We were surprised by these results. We realized this is much more than a student issue- it’s an employer issue. One that will invade the thoughts and decisions of almost half of our employees.
I have talked with many of our employees that are trying desperately to pay off their student debt. I soon realized that this is not typical “debt.” It is difficult for a young adult to understand the burden their debt will place on them into the future. Some have not worked full time, paid rent, bought a car, or groceries. And, as a working adult, the payments they must make towards their student debt make it difficult to make important financial decisions like buying a house or saving for retirement.
My employer has decided to help. We channel the company’s “401k match” and apply it to our employee’s student loans. At times, it can reduce their loan terms from 20 years down to 11 years- nearly by half!
Unfortunately, our employees must pay tax on this contribution, because paying off student debt, (unlike reimbursing for tuition or a 401K contribution) is not considered tax free income. Section 127 of the Internal Revenue Code allows employers to contribute up to $5,250 annually towards an employee’s tuition. Amending this section to include student debt contributions will allow employers the ability to provide funds to help their employees move on with their life. Several bills being considered by Congress will do just that.
At my organization, it is important that we help our employees with tuition, with retirement savings, and now with student loan repayment. For us, it was the next logical step to ensure we’re recruiting and retaining the best and brightest talent.