RTC Shannon Ramirez was scrolling through LinkedIn when she came across an ad touting a program by healthcare company Abbott that enables employees to pay off their student loan debt faster while still saving for retirement.
“I remembered instantly thinking ‘Wow, I wish I had access to a program like that, how it could really help … take some stress off and help my family,” says Ramirez, 42, who is trying to pare down over $50,000 in student loans.
In December, she left the recruitment company she worked for to become a learning and development supervisor for Abbott near her hometown of New Brighton, Minnesota. She’s now doubled the payments she makes on her student loans. “It’s making a huge impact financially and psychologically,” Ramirez says.
While there’s little doubt that salary and health insurance remain top priorities for job seekers, many are also eager to work for companies that help them whittle down their student loan obligations.
Among adults with student loans, more than 6 in 10 say working for a business that assists with that financial burden is a key enticement, according to an Abbott survey conducted by YouGov. Among those who are working and have education-related debt, 62% would think about moving to a different company that offered such a benefit.
Meanwhile, a 2017 survey by the private nonprofit group American Student Assistance found that 86% of young employees would commit to their company for five years if it promised to help pay down their student loans.
The landscape is limited, with only 4% of companies offering some type of student loan debt assistance or repayment perk according to a 2018 report from the Society for Human Resource Management.
But with Americans owing $1.57 trillion in college-related debt, some businesses and lawmakers are trying to address the problem. A study released in April by the Employee Benefit Research Institute found that roughly 32% of employers interested in providing their staffs with financial wellness programs said they offered or would provide some type of student loan debt assistance.
Earlier this year, the Zillow Group, which operates several real estate websites, began offering its employees access to a portal called Tuition.io where they can get debt management tips, including possibilities for refinancing student loans. The company will also contribute $25 a month toward whatever payment plan the employee puts in place.
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“It was … the number one requested benefit addition for our employees,” says Dan Spaulding, Zillow’s chief people officer. He added that 580 staffers – or roughly 10% percent of the company’s workforce – are taking advantage of the perk.
The consulting firm PwC launched a benefit in September 2015 that pays $1,200 a year for up to six years to help employees reduce their student loan burden. The company says that assistance will shrink what a participant has to pay by up to $10,000, and help them pay off their debt up to three years earlier.
That’s critical because student loan obligations are preventing Americans from saving for their retirement. The Abbott survey found that 42% of those with student loans aren’t putting aside money for the years when they will be out of the workforce. The number rises to 48% for those between 18 and 34.
And the American Student Assistance poll found that 59% of younger employees said it was more important to pay off student loan debt than to put money into their 401(k) savings plans.
Through its “Freedom 2 Save” program, Abbott will contribute 5% to an employee’s 401(k) and not require the staffer to match it as long as they are putting at least 2% of their income toward paying down their student loans.
“We knew student loans were weighing on our employees, and on the minds of candidates, but what we learned through this survey is this issue matters even more than we knew,” Steve Fussell, executive vice president of human resources for Abbott, said in a statement.
Abbott’s program helped seal the deal for Harvir Humpal, a development quality engineer, who was weighing two other job offers after getting his Master’s degree in biomedical engineering.
“Student loan debt is a very big part of my life,” says Humpal, 24, who joined Abbott in February. Its loan benefit program will enable him to pay off his roughly $60,000 in loans four years earlier, as well as about $7,000 less in principal interest. “I wouldn’t trade my education away for anything, but (the debt) is a big issue that’s going to impact me over the long haul. It affects other stuff like getting a car, getting a house (and) your credit score. .. It definitely takes a toll on you.”
Being able to more aggressively chip away at what he owes, as well as build his savings, enabled Humpal to finally buy a Toyota Camry a couple of weeks ago.
Before that, “I was actually using my dad’s car for a little while,” he explained. “We’d carpool, and I’d drop him off where he’s working and then I’d drive to Abbott.”
Federal legislation has been introduced that could make Abbott’s program model more widespread.
In May, Senators Rob Portman (R-OH) and Ben Cardin (D-MD) introduced a bill aimed at shoring up retirement savings. It includes a provision to allow employers to make a contribution to their workers’ retirement accounts that matches what they pay toward their student loans.
Such assistance “has been so helpful in me feeling more financially secure, helping me think long term,’’ says Shannon Ramirez. “That leads to stress-free time with my children because we’re not thinking about money.”
Would you prefer money toward saving for retirement or paying off student debt? Share your thoughts in the comments and with us on Twitter.