More companies consider helping workers pay student loans
An important factor is that under the federal government’s pandemic relief programs introduced in 2020, employers can tax exempt loan repayment contributions to their employees of up to $5,250 per year until 2025. Employees do not have to pay income tax on the benefit. (Previously, unlike tuition assistance payments for college-enrolled employees, loan repayment contributions were taxable.)
McLaren Northern Michigan Hospital in Petoskey, Michigan, is among the employers that have added a Direct Assist benefit. The hospital began offering student loan assistance this month, joining two other hospitals in its health system, said Todd Burch, president and chief executive of McLaren Northern.
It has become particularly difficult to retain nurses, Burch said, as they are increasingly able to work on lucrative mobile assignments as traveling nurses. “We are looking for unique offers to recruit and retain top talent,” he said.
The benefit is available to all employees after working at the hospital for six months and pays $200 per month in the first year, $300 per month in the second year and $400 per month in the third year, with a maximum of 12 $000. (Benefits are pro-rated for part-time workers.) Already, 91 employees have applied for the benefit.
McLaren works with Beautiful, a startup that handles student loan repayment claims for businesses. Workers submit their loan information to Goodly, which verifies the worker’s eligibility and forwards payments from the employer to the lender.
Esker, a software company with US headquarters in Wisconsin, started offering this benefit in 2019. The company typically hires workers straight from college, so college loans are often an issue. , said Anne Donarski, director of finance and administration of the company.
“We know that student debt is becoming a bigger and bigger burden,” she said.
Employees are eligible from their first day on the job, but the contribution increases with their seniority with the company – from $100 per month to start, up to $150 per month, payable over five years. The company has about 200 employees, and 55 profit from it. Esker has so far paid out about $186,000 on loan, Ms. Donarski said.