The next job benefit could be student loan repayments

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An increasing number of U.S. employers are offering to help employees pay off their student loans as part of the benefit packages but as the trend gains momentum, don’t be surprised if Canadian companies slate it into their own benefit packages.

Earlier this week publisher Penguin Random House announced a new student loan repayment perk, which gives employees $1,200 a year throughout their employment, for up to seven and a half years. The benefit, which amounts to $9,000 when maxed out, will kick in January 2017 for any regular full-time employee who’s been with the company for a year.

“We have always believed in doing our part to tackle broader societal challenges by starting within our own communities,” Markus Dohle, CEO of Penguin Random House, said in a release touting the news. “With this new benefit for our employees, we have another opportunity to live up to our mission and help our employees invest in their futures while also making Penguin Random House a happy, productive, and rewarding place to work.”

While the concept is relatively new, it’s by no means unheard of with companies, specifically in the financial sphere, like PricewaterhouseCoopers and Fidelity Investments and education companies like Chegg, offering the benefit to employees.

According to the Society for Human Resource Management’s annual report on employee benefits, about four per cent of employers offered student loan repayment as a perk in 2016 up from three per cent in 2015. Another survey, this one by Fidelity Investments and the National Business Group on Health, found that 13 per cent of the 129 companies polled offered student loan repayment as a benefit while 21 per cent say they plan on implementing some sort of system in the future.

Janet Salopek, partner and senior consultant at HR-focused Salopek and Associates, says she sees it as an emerging trend.

“Millennials like relevancy… and they would see this as a real benefit that has meaning to them in their pockets today,” says Salopek. “I think you’re going to see a lot more organizations doing it, but realizing it’s going to be a taxable benefit.”

In some ways, Canadian employers are already offering a similar benefit in the form of a personal wellness savings or spending account where employers make contributions.

“We’ve already set the precedent,” says Salopek, adding that in a lot of ways, a student loan repayment plan is akin to a bonus but with better branding. “This has relevancy for the new hire, they see where they can actually channel (the benefit) – I think many organizations are starting to really pay attention to what is it they need to do in order to attract and retain… it’s really part of their people strategy.”

A program similar to Penguin which spreads it out over a longer term period like seven years could go a long way in not just attracting but also retaining millennials, who are notorious for job-hopping and most likely not thinking so much about their retirement when they first enter the job force as they are about paying down their student loans.

“They’re not really interested in the pension plans,” she says. “(But) this has relevance.”