The Need for Relevant, Impactful, Affordable Employee Benefits to Attract Talent
This piece was originally published on www.workmorphis.com
The global pandemic has impacted every aspect of our lives and has changed our perspective on work as a result. A renewed focus on family, health, and financial security have many questioning whether their company is aligned with their life goals. As a result, better compensation and benefits are the top reason people are considering switching jobs in 2021. Employees are leaving in search of better culture, benefits, and compensation and it’s hurting employers. A lot.
With 52% of employees expected to look for a new job this year, student loan repayment assistance will be a key differentiator in the competition for top talent. In this post, we’ll review student loan repayment assistance as a popular emerging benefit to attract talent.
The Cost of Turnover
The Work Institute estimates the cost of turnover can range from 33% up to 200% of the departing employee’s salary. For a median income earner with a bachelor’s degree, that’s $18,051 per employee … on the low end.
The cost of lost productivity, replacement searching, the hiring process, and onboarding add up quickly. Not to mention impacts to team morale and continuity with customers.
This puts companies that successfully distinguish themselves in a unique competitive position. Not only will they save thousands of dollars from reduced turnover, their chances of capturing available talent improves drastically.
Employers are left with limited options: increase compensation or adjust their benefits offering.
Increasing compensation is a costly solution. Forbes estimates the average raise an employee receives for leaving is a 10% to 20% increase in salary. Shelling out that kind of cash to keep one or two of your star performers may make sense, but is not sustainable company-wide.
Adjusting benefits offerings is a more reasonable strategy. Following the shift to remote work, many companies are already reassessing how relevant and impactful their offerings are.
This shift calls for employers to implement employee benefits that are relevant, impactful, and affordable to help attract talent.
Relevant
A study by the American Institute of CPAs asked millennial job seekers to rank their top three desired employee benefits. 41% said they want student loan repayment as an employee benefit, and a third ranked health insurance and paid time off.
When asked to split $100 between student loan repayment assistance and other benefits, young adult job seekers put $61+ towards student loan repayment assistance.
In a study by Student Loan Hero, 45% of employees said they prefer student loan assistance over a 401(k) plan. It’s no wonder 90% of professionals are more likely to accept a job offering student loan repayment assistance.
Impactful
This preference for student loan support among employees is not surprising. 54% of employees say financial challenges cause them the most stress in life. For many, the center of this stress is student loan debt. Contributing just $100 per month to a new graduate’s student loans gets them out of debt 2.5 years faster and saves them over $11,000 in payments and interest combined.
The Student Debt Crisis at a Glance
Student loan debt has more than doubled since 2008, becoming the second largest source of household debt (second only to mortgages).
The $1.7 trillion dollars of outstanding student debt impacts an estimated 45 million Americans.
19% of the Federal student loan portfolio is in default (about 8 million people).
4.1 million people over the age of 50 have more than $20,000 in outstanding federal student loans.
73% of millennials have delayed a major financial milestone (home buying, having children, marriage, etc.) as a result of student loan debt.
Reducing financial stress with student loan repayment assistance makes a meaningful impact on your employees. Lower financial stress is proven to increase productivity and morale, lower absenteeism, and increase engagement among employees.
Engaged employees stay with their employer longer.
Affordable
Most student loan repayment programs offer between $85 and $150 per month towards their employees’ student loans. Given median income among bachelor’s degree recipients, that’s about 3.3% of annual salary.
The cherry on top: thanks to the CARES Act and the Consolidated Appropriations Act, student loan repayment contributions are tax deductible for employers and do not count as compensation for recipients (so it’s not a tax burden). Offset against the gains in retention, offering student loan repayment assistance can positively impact your bottom line.
Given the savings these programs boast in terms of lower turnover and tax deductions, the number of employers offering student loan repayment assistance has doubled in the last few years according to the Society for Human Resource Management (SHRM).
Student Loan Repayment Assistance as a Benefit
Student loan debt is a societal problem requiring a societal solution. Providing student loan repayment assistance as an employee benefit meets a real need for your team and is a relevant, impactful, and affordable solution.
About Workmorphis
At Workmorphis, we help our partners ask themselves what they could be doing differently to stand out from the competition. Workmorphis provides a full suite of services to help organizations across the U.S. revitalize their workforce, including workforce planning strategies, skills transformation, diversified workforce pipeline strategies, employee support and empowerment, and more.
Connect with us at 877.999.7717 or info@workmorphis.com to offer your insights or learn how we can help you transform your workforce.
About Dolr
Dolr is a Columbus-based Fintech accelerating its members to $0 student debt by surrounding them with the help they need to overcome their biggest financial burdens. Dolr helps employees navigate their loans and find new ways to lower their monthly payments while offering a low-overhead, seamless, and integrated experience for employers. Dolr connects its members with extra cash for student loan repayment from where they work, live, and shop.
Meet the Authors
Naveed Iqbal is the CEO and co-founder at Dolr, a Columbus-based Fintech focused on tackling the student debt crisis by surrounding people with the help they need for their biggest financial burdens. He is experienced in data science with bank scale data and product development and delivery of consumer-facing financial products at the largest bank in the country. Naveed holds a PhD in Applied Mathematics from the Florida Institute of Technology. In his spare time, he enjoys reading, exploring the outdoors, and baking.
Emily Fabiano is the founder of Workmorphis, a cross-sector workforce consultancy helping organizations build a more resilient workforce to thrive in a changing economy. Fabiano has deep experience in workforce transformation at the government level, working at the cross section of workforce strategy, economic development, and public policy. With a keen understanding of the unique challenges facing today’s and tomorrow’s workforce and the ability to communicate across sectors, Fabiano brings a new level of understanding and collaboration required to connect industry and education and prepare people for jobs.
Nicholas Klein is a consultant at Workmorphis where he focuses on project execution and policy strategy. He specializes in labor market-driven solutions and is passionate about advancing policies that create economic mobility. Nick is a two-time graduate of The Ohio State University, earning his Master of Public Administration (MPA) from the John Glenn College of Public Affairs in 2022 and his BA in 2016. In between, he worked in the entertainment industry. His favorite things include action-adventure video games, history, indie and Americana music, and science fiction movies.