What if I told you there might be an employer out there willing to pay off your student loans? While it might sound too good to be true, it’s slowly becoming a reality.
It’s no secret that student loan debt is becoming a problem in the United States. According to The Institute for College Access and Success, 68 percent of seniors who graduated from public and nonprofit colleges in 2015 had outstanding student loan debt.
Since presidential candidates Hillary Clinton and Bernie Sanders brought this issue to the national stage, many companies are seeing an opportunity to make themselves more attractive to graduates seeking jobs.
These companies aren’t wrong. According to a 2016 survey by tuition assistance company EdAssist, 49 percent of workers said they would rather receive assistance with paying off student loan debt than any other type of employee benefit, including retirement. I suspect this trend will only increase with future generations of students having a larger debt burden.
The Society for Human Resource Management found 3 percent of employers offer this benefit. However, Gradifi, a company that helps corporations set up these plans, sees big potential. Gradifi CEO Tim DeMello said that while they only have 20 companies using their services, more than 700 have inquired about them in the past year.
This is good news for those of you binge-drinking on a Monday at the thought of graduating with student loans.
So how does this employee benefit work exactly? Because it’s so new, there isn’t much of a precedent to go off of just yet. However, we can look at what one of the forefathers of this benefit, PricewaterhouseCoopers, is doing.
The Big Four accounting firm will pay employees up to $100 a month, $1,200 per year, for six years toward reducing student loan debt.
There is a downside though. This type of benefit has no special tax treatment, meaning any money your employer pays to you for student loan debt repayment will be considered income and taxed accordingly.
Other benefits, such as tuition reimbursement, are considered tax-free up to $5,250. The good news is states are beginning to pressure the Internal Revenue Service to change this ruling. Massachusetts is considering legislation that would allow employers to take deductions up to $3,600 per year for student loan reimbursement made on behalf of employees and for employees to receive benefits tax-free.
With this type of benefit gaining momentum both in the corporate world and government, there is a good chance that by the time you graduate, a company may offer you this benefit. If not, talk to the human resources department and see if the company may be interested.
Jay is a 22-year-old finance senior from St. Simons Island, Georgia.