At Work

Student loan benefit …employer assistance

Not many employers on board yet, but if the competition for talent heats up, you may see this as a growing benefit. Too bad low interest loans can’t be a 401k investment fund. 🤓

Student loan assistance. Student loans are a major stressor for workers, especially millennials. A small but growing number of employers now offer student loan assistance. According to a 2017 survey by Society for Human Resource Management, 4 percent of SHRM members offer this perk. Oldham expects those numbers to continue to grow in 2018.

Student loan programs come in a few different flavors. Some employers provide money toward employees’ student loans, while others don’t contribute to loan payments but provide access to third parties that might offer a lower interest rate on a refinanced student loan.

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Categories: At Work, Observations on life

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7 replies »

  1. When President Obama revamped student loan program in March of 2010 it eliminated fees paid to private banks giving the Government control. This has proven to be disaster for students. I have a tenant my building that owes $120,000 in student loans. Her interest rate is 9,5%! She cannot lower it because she ‘consolidated’ at some point without fully understanding the consequences. She works hard as a social worker and every time she gets a raise, the student loan amount she owes goes up. At 9.5% interest she hardly pays the interest and cannot bring down the principal. Really smart, hardworking person. Has highest degree in Social work and could open her own office, but still young and loves the people she is helping where she works. Sometimes the government should stay out of the business of controlling peoples lives by taking over certain aspects of our society..

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  2. Median loan payment ~$300/month

    Adds to inequity – consider those who had military service/go bill, those who saved up, those who worked throughout school, those who long ago paid debts, etc.

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  3. I once borrowed from my 401K during the 1990’s. It turned out that for the two years I had the loan, the market was negative and I actually made money that year by dumb luck by paying myself back. I did it to buy a piece of land that was up for auction that was adjacent to my house. I double my land and the value of my house. I do not recommend borrowing from a 401K but I did lucked out.

    But as far as a student loan / 401K fund option, I am sure most ex-students would not have enough equity in their 401 fund to borrow the money. If they are saving at all they are just doing the minimum so they can pay their student loans.

    I also think that the employer offered assistance will be in very select fields. You would have thought years ago that the medical field would have offered this and full payment of malpractice insurance in all markets. But everybody wants to be a doctor and lenders are glad to give the loans.

    Then again some people will be short sighted and rather take a higher wage instead because they only understand the amount of cash in their pocket.

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  4. “but if the competition for talent heats up”… I think a large part of the student loan problem is that the people who are having the most trouble paying back their loans are those who have degrees in fields that have little prospect for well-paying future jobs or those who leave school before receiving a degree.Future employment expectations often don’t correlate well with reality.

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  5. Another benefit for employees, not a good idea. The cost of these programs will raise prices on the products and services provided by the companies.
    We need to teach young employees there is no free lunch. If you take out a loan, you better be able to pay it back. It is not the government or employers responsibility to bail anyone out. Someone needs to tell Congress no more bailouts.

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