In 2015, three percent of employers surveyed offered a relatively new employee benefit: student loan contributions.
Some of the benefits of employers helping employees pay off their student loans include improving hiring and retention, reducing employee stress, and helping employees save money.
Forty-nine percent of student loan holders surveyed said they would rather receive student loan contributions than a 401K. Another survey found that 37 percent of working adults spend three or more hours each week at work worrying about their personal finances, which reduces productivity.
However, a current disadvantage of employer student loan contributions is that they are considered taxable income, so employees may pay more in taxes. Congress is considering legislation to make student loan contributions tax exempt. Matt Stratz "Help With Student Loans Is the 'Hot' New Employee Benefit,"entrepreneur.com (Mar. 21, 2016).
Paying employee student loans may sound like a great way to attract the best talent, but it is not without risks. The perk inevitably benefits mostly younger workers who are more likely to have outstanding student loans more than it would benefit older workers. Therefore, employers who offer student loan contributions could face age discrimination claims from older workers. Even if the benefit is provided to all employees, younger and older, the reality is that younger workers benefit more, and that creates an age discrimination risk.
Employers who are considering student loan contributions as a way to boost hiring, retention, and productivity should think about how they can equally compensate older employees. One option is to offer employees a choice between contributions to student loans or to a 401K.
Via: Hartford Help