There is a new employee benefit that is storming the world of business and that is student loan contributions. More and more employers are now providing their employees every month with a specified amount of money designated to paying off their loans. This new concept has not yet full been embraced by all employers, yet many are starting to consider it.
Here are the pros and cons of this new benefit:
1. Improved Hiring and Retention
The fact is that around 69% of graduates at nonprofit and public colleges finish school with some kind of student loan debt. Loan assistance undoubtedly will influence the career path of a young professional. If more opportunities are provided to talented professionals and they are able to have their pick of employers, the differentiating factor that an employer needs may very well be student loan contributions this will help the employer to beat out the competition. By offering this perk, employers may also help their current employees feel more valued and satisfied at work, this will help to boost retention.
2. Reduced Levels of Stress
Employees are stressed by their home lives, everyday finances and of course work. Add to that a whopping amount that a student loan debt can means and financial stress overwhelms professionals even more. This is something which can seriously harm their workplace performance. Some of that stress can be reduced by offering student loan assistance, this allows employees to focus on their work and thus improve levels of productivity.
3. Employees Will Save Money
There are perks which look great on paper yet do not really do much for employees, this is not the case with student loan assistance, and it can greatly and positively impact the livelihoods of employees and improve their financial standing dramatically. By offering employees student loan contributions, it can provide them with something that is truly valuable; improving their financial status and helping them to be professionals that are happy and more productive.
1. Employees Will Pay More Taxes
The one con is that tax implications involved something that employers must consider and discuss with their employees prior to offering this benefit. At this moment that law states that student loan assistance provided by employer is considered to be a taxable income. So even though employees are saving money as well as shaving of time from their plan for loan repayment, they could be paying higher amounts of taxes.
That being said, despite the added tax burden which is currently in place, student loan contributions are becoming a popular benefits for employees, one which your business or organization may want to consider. This is something that employees, particularly the younger ones, will probably greatly appreciate.