Employers are offering to help pay off workers’ student loans
Mike Schabel remembers eating peanut butter and tortillas to save money while he and his wife paid off about $100,000 in student debt.
So two decades later, when Schabel — now chief executive of Kiswe, a video-streaming start-up — found himself trying to compete for recruits against technology giants such as Amazon and Google, he adopted a novel approach: offering to help chip away at student loans.
“Trying to get and keep top technical talent is important,” said Schabel, whose firm employs 45 people on the East Coast and abroad.
Kiswe lacks a Silicon Valley powerhouse budget, but Schabel hopes the perk will help his company stand out to job seekers in a historically tight labor market.
The country has more job openings than available applicants, so finding the right fit for open positions is tough, he said.
Kiswe began making $50 monthly contributions for staffers with student debt this month.
“I have folks fresh out of school who are doing their ... best to make ends meet,” Schabel said. “They’ve put themselves in massive debt to come work for me.”
Approximately 1 in 4 adults in the United States holds student debt, and the collective total hit $1.5 trillion last year, according to Federal Reserve data.
Economists say the burden prevents or delays some people from having children, buying homes and starting businesses.
The Society for Human Resource Management, a trade group that annually surveys roughly 3,500 HR professionals about the benefits at their workplaces, said more companies are offering to help recruits with student loans — but the value of that perk varies widely.
International consulting firm PwC introduced the benefit in 2016, offering $1,200 annually directly to the loan provider for six years. About 8,700 employees have signed up, the company said.
“Even employees with no student loan debt tell us they are proud of the pioneering benefit,” the firm’s chief people officer, Michael Fenlon, said in an email. “They are proud the firm is taking on such a complex, important issue in our society, especially one they see negatively affecting their own friends, family and colleagues.”
Insurance provider Aetna unrolled its student loan payment program in 2017, sending $2,000 a year to loan service companies, with a lifetime maximum of $10,000 per worker.
More employers are considering adding the benefit as it becomes harder to fill vacancies, said Alison Sullivan, an economic data researcher at employment website Glassdoor.
“Employers know that a lot of workers are strapped with student loan debt and expect to be chipping away at that for decades,” Sullivan said.
The load disproportionately weighs on women and minorities, according to a recent analysis of government data from the American Assn. of University Women: Women with bachelor’s degrees take on about $2,700 more in loans than their male counterparts, and black women carry more student debt than any other demographic group.
David Aronson, founder of Peanut Butter, a Chicago start-up that helps companies run loan payment plans, said the benefit has been slow to catch on because loan payments still count as taxable income — unlike college tuition assistance. (Aronson named his company after his reliance on peanut butter sandwiches during his financially lean years.)
Plus, he said, many of today’s business leaders graduated at a time when it was easier to pay for college with a part-time job.
But Aronson said the number of his clients doubled in 2018 to 300. They include employers in technology, financial services and corporate offices.
He expects that growth to continue if the country’s unemployment rate stays below 4%, as it has done for the last six months.
“Executives are starting to realize that the burden of student debt is very different than when they came out of school,” Aronson said.
Still, workers of all ages feel stuck with student debt. Former President Obama, for instance, has revealed that he finally paid off his loans when he was in his 40s.
Brooke Wood, 48, a branch supervisor at an Alabama Credit Union office in Birmingham, said her five-figure balance was like a “woolly mammoth” she tried to ignore.
“I don’t like to look over there very often,” she said.
She studied theater at the University of Alabama and yearned to launch an acting career in New York. But steady income eluded her. Interest charges stacked up. She moved back to the South for stability.
Then, this year, her employer introduced a new benefit.
Wood now receives an extra $50 each month to chip away at her student debt — a meaningful contribution on top of her $55,000 salary, she said.
“It makes me feel more valued,” Wood said. “It also takes away some of that shame.”
Paquette writes for the Washington Post.
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