While only 10% of employers offer student loan refinancing programs, 5% are considering adding one this year, and another 20% say they might make the leap in 2020 or 2021, Willis Towers Watson learned in a recent survey. Eight percent currently offer student loan consolidation, 5% may add it this year, and 21% sometime in the next two years. However, far less common are employer contributions toward student loan debt, handled by a mere 3% of employers. Four percent may make these contributions this year, and 24% are considering making them by 2021.
While tuition reimbursement programs, which are federally regulated, are far more common—offered by 80% of employers—Willis Towers Watson is starting to see “a significant increase in the number of employers considering student loan repayment programs when they think about the overall wellness of their worker population,” Lydia Jilek, senior director of voluntary benefits at the consultancy, tells PLANADVISER.
And, while student loan debt, estimated to now top $1.5 trillion in the U.S., is “pervasive within the U.S. population, among all generations,” Jilek says, a company should assess whether a student loan repayment program would be right for its employee base before implementing it.
That said, Jilek reveals that Millennials are the most vocal about asking for such programs, but, in fact, workers in their 30s and 40s carry the highest student loan debt balances. Further, many people in their 60s have taken out student loans on behalf of their children and/or grandchildren, and this group has the highest delinquency rate for these loans, she says.
According to Jilek, because some employers are hesitant to take on the added expense of student loan repayment programs, some opt to only offer one to a pilot group of their worker population, such as graduates of certain years. Others start with a “debt consolidation dashboard that they then use as a proxy to see the take-up rate,” she says. “That might indicate, for example, that the employer would be faced with a take-up rate of student loan repayment programs of 20% of its worker population.”
Jilek reports hearing that the IRS may expand the Abbott ruling, which permitted that company to give 401(k) matches for workers paying down their student loan debt. She says the IRS may make a decision by the end of the year. “My perception is that we are on a faster track because of the growing interest in offering these programs to employees across the board,” she says. However, it is “unclear whether the IRS will grant additional flexibility.”