College graduates are entering the workforce with student loan debt averaging about $35,000. Some are finding a new partner in paying those huge monthly bills: their employer.
Large companies such as health insurance giant Aetna Inc., Fidelity Investments and international accounting firm PricewaterhouseCoopers provide money toward student loans as part of their employee benefits package.
The companies are responding to a $1.3 trillion issue. Student indebtedness climbed 170 percent between 2006 and 2016.
New York Life Insurance Co., which is based in Manhattan and employs about 600 people in downtown White Plains, added student loan assistance to its list of employee benefits last fall.
Justin Bush, who works at the company’s office at Westchester One in White Plains, is one of the employees who will benefit.
Bush, 33, who has been with the company four years, directs its data modernization efforts. And while his master’s degree in mathematics from Syracuse University helps in that job, it has also left his finances weighed down by student loan debt.
“The impact, mentally, is daunting,” said Bush. “You look and say, ‘Wow, that’s a lot of debt.’”
Beyond the psychological impact, there are the financial challenges, he said. How do you buy a home or a new car when a significant chunk of your income is already set aside for monthly loan payments?
“It is difficult for anyone who is not in the later stages of their career to pay a large monthly student loan payment,” Bush said. “One of the biggest impacts of my student loan payments was my ability to purchase a home, since your expendable income is significantly reduced.”
New York Life’s program provides employees up to $10,200 over five years to help pay back student loans. Similar to most student loan assistance programs, the company provides the payments monthly.
Angela Murawski, vice president of human resources for New York Life, said about 700 employees have signed up for the program in its first four months.
“We believe that student loan debt can delay many important life events, including buying a home or starting a family,” Murawski said. “We thought it important to provide real assistance to lessen the burden of this debt by helping to accelerate the repayment process.”
Smaller employers have added the benefit as well, such as the city of Memphis and the online textbook rental service Chegg.
New York Life’s program is open to employees from the date they are hired at either of New York Life Insurance Co., or its affiliated New York Life Investment Management and Index IQ.
The company’s partner on the program is Student Loan Genius. The Texas-based technology company handles the distribution of the benefit and offers online tools and counseling for managing payments. Murawski said about 1,400 New York Life employees are just using the advisory tools, without seeking contributions from the company.
Along with Student Loan Genius, software and service companies such as Gradifi and Tuition.io have jumped into the market to help employers manage student loan assistance benefits.
Student Loan Genius’ other clients include Ralph Lauren Corp. and Pinterest. Gradifi announced in December that it had partnered with more than 300 businesses. The company was acquired by First Republic Bank in 2016. Tuition.io, meanwhile, manages more than $2 billion in student loan debt for companies it said range from Fortune 500s to startups and public entities.
Student loan help is still far from being a standard employee benefit. In a 2017 survey of its members, the national Society for Human Resource Management found just 4 percent of the 3,000 responding companies offered student loan assistance. That’s still up from 2015 — when it was 3 percent.
That number is expected to increase. The federal Consumer Financial Protection Bureau published a report in August 2017 that highlighted student loan assistance programs as an innovative benefit strategy likely to grow.
Ibraiz Tarique, director of HR programs at Pace University’s Lubin School of Business, said it’s important to view student loan assistance as part of an overall talent strategy that employers are adopting. Companies are often maxed out in the salaries they can offer to attract top talent, so they are getting creative with employee benefits.
“They’re trying to figure out ways to differentiate themselves and this is an emerging tool in attracting talent,” Tarique said. “And I think it will pick up as more companies, and smaller companies, realize it’s an important tool they can use.”
That could apply especially to Westchester County, which has a mix of industries requiring advanced degrees and skills, including headquarters for several Fortune 500 companies. Those employers are all competing for workers at a time when Westchester’s unemployment rate hovers below 5 percent.
“The labor market has tightened, so the battle for skilled people is increasing,” said Amy Allen, vice president of the Westchester County Association business group.
Allen grouped student loan assistance with other employee incentives, such as a signing bonus and tuition reimbursement for pursuing further education.
“Employers are always looking for ways to invest in their employees,” Allen said. “For millennials, the student debt issue is a huge one. So, if you want to have qualified people, this could be an incentive.”
Matthew Alfieri, an adjunct professor at the Manhattanville College School of Business specializing in human resources, said student loan assistance should appeal not only to companies in competitive industries, but also ones that require continuity in their workforce.
Engineers, for example, often require intense training when joining a new company.
“It could take you 6 to 12 months alone just to learn your job as an engineer,” Alfieri said. “So a lot of employers are going right to schools and saying we want to mold someone our way, we want them to learn our way of engineering, our product line and we hope they will become a loyal employee to us.”
Laura Loughlin, owner and recruiting manager of the Loughlin Personnel staffing agency in White Plains, called it a huge potential benefit for employees, but said she hadn’t come across a local company offering student loan assistance.
“It’s a great idea,” said Loughlin. “I’m all for different ways to entice people to work for our companies.”
For New York Life’s Bush, the company’s contributions go straight to the principle on his student loans, helping him pay down the debt faster.
The program, he said, can provide employees in similar situations to his “a little bit of relief towards an ever-growing cost of obtaining a degree.”
“It’s an added benefit that helps you know that the company cares.”