Student Loan Repayment
as an Employment Benefit
Kelvin Chu
Sean Feeney

Background
● Traditionally, large employers trained their
own workforces (Examples: Nucor Steel,
Ford)
● With the expansion of compulsory (and
public) schooling in the early 1900s,
industry collaborated with local schools on
skills and curriculum required of their
incoming workforce
o Modern example: Kentucky Occupational Skill
Standards (KOSSA) high school assessment
o This also continues today in the form of candidate
pipelines at preferred colleges

The Perfect Storm
● As we became a post-industrial society
competing in a global knowledge economy,
college diplomas became a prerequisite to
the most basic of jobs
● This coincided with
o The American business community expanding the
socialization of workforce training costs through
collaborations with schools
o College tuition rates rising much more rapidly than
the cost of inflation
o Public funding of college attendance not keeping
up with the rising costs

The Perfect Storm (in charts)
Private lenders begin
lobbying Congress
to remove student loan
bankruptcy protections

The Perfect Storm (in charts)
Bankruptcy
Protections

The Perfect Storm (in charts)
Yellow is inflation-adjusted state financial aid paid per student.
Red is inflation-adjusted out-of-pocket tuition costs paid after all
non-loan financial aid is exhausted.
http://economix.blogs.nytimes.com/2012/03/02/why-tuition-has-skyrocketed-at-state-schools/?_r=0

The Problem
So what is “the other 98%” to do at the risk of
being unemployable? Take on student loans to
cover the difference.
http://www.motherjones.com/politics/2013/06/student-loan-debt-
charts
Bankruptcy
Protections

The Problem
70% of undergrad students, of
your employee pipeline, now
have student loan debt
burdens.1,4
Student loan debt
disproportionately affects
minorities and those from less
advantaged households.
● 81% of African-American grads
have student loan debt.2
1. http://blogs.wsj.com/numbers/congatulations-to-class-of-2014-the-most-indebted-ever-1368/
2. https://cdn.americanprogress.org/wp-content/uploads/2012/10/WhiteStudentDebt-5.pdf
3. http://hereandnow.wbur.org/2012/05/15/student-loans-debt
4. Student Debt and the Class of 2013 - Institute For College Access and Success
The class of 2014 owed an
average of $33,000 per student.1
10% of students owe more than
$54,000.2 3% of students owe
more than $100,000.3

Why Should HR Care?
● Financially unstable employees are more likely to job
hop, seeking higher pay to try and cover student loans
which have no legal recourse for discharge.
● Student loan lenders are known to actively research
work phone numbers and disrupt your employees at
work, hounding them for repayment.
● Student loans disproportionately affect minorities,
making it that much more difficult to recruit and
retain a diverse workforce.
● Studies have found that “cumulative student loans
[are] significantly and inversely associated with better
psychological functioning.”
Sick of our loans: Student borrowing and the mental health of young
adults in the United States - Walsemann, Gee, Gentile

Why Should HR Care?
Studies have shown that higher levels of debt
can lead to stress, which can ultimately lead
to health issues
● ex. high blood pressure, heart disease,
anxiety, weaker immune system
● This would in turn increase healthcare costs
for businesses
The high price of debt - Sweet, Nandi, Adam, McDade

The Opportunity
● With the competition for talent
being fierce, companies are
turning to exotic / fringe benefits
to recruit and retain employees.
(Examples: Facebook, Google)
● To stand out to prospective
employees, and retain the ones
you have, you should offer
student loan reimbursement as a
form of compensation.
(NPR) - Kelsey
Griffith of Ottawa,
OH, graduated
with a 4-year
degree from Ohio
Northern
University with
$120,000 in debt.
The payments
start at $900/mo.
http://hereandnow.wbur.org/2012/05/15/
student-loans-debt

The Small Leap to SL Reimbursement
● Many companies, acknowledging the edge
that higher education offer its workforce,
have long offered tuition assistance as a
form of benefit.
● This benefit is often structured as a
reimbursement after a course has been
completed.
● We propose expanding this into post-
tuition reimbursement (student loan
repayment).

Best Practices - Retain
“While a repayment program will likely bring significant
costs, it will pay dividends in the long run.”
-Ann Hollingsworth, HR, Memorial Hermann Health System
● MHHS in Houston, Texas is one of the latest employers
to set up a student loan repayment benefit program.
● Full-time and part-time employees who have earned a
degree within the last three years are eligible.
● Employees must commit to stay with MHHS for at least
two years after the final loan repayment.
● The program is paid for through the lower, overall
cost of hiring people due to a higher retention rate
and increased productivity from more engaged
employees.
http://www.bizjournals.com/houston/morning_call/2015/02/
major-houston-employer-to-help-repay-employees.html

Best Practices - Recruit
● Montana found it difficult to recruit public
school teachers in rural areas.
● The Office of Public Instruction set up a
student loan repayment assistance program
for targeted areas.
● Teachers were eligible for student loan
repayment assistance of up to $3,000 a year
for four years, for a total of up to $12,000.
● 141 teachers were awarded $417,000 in
student loan repayment assistance.
● Mississippi has a similar program.
http://www.kaj18.com/news/mt-teachers-in-critical-shortage-areas-may-get-student-loan-help/
http://higherednotdebt.org/blog/montana-wants-employers-pay-employees-student-loans
If Montana HB341
passes, all Montana
employers would
get a tax credit of up
to $450/ employee
annually for up to
three years against
either their
corporate or
individual tax
income, if they
directly kick in
$1,800 to lower their
employee’s student
loan debt.

Best Practices - Public Sector
● If your employees qualify as public
servants, the Consumer Financial
Protection Bureau recommends structuring
your student loan repayment program
around existing government student loan
forgiveness programs.
● Help your employees fill out the Public
Service Loan Forgiveness (PSLF)
paperwork.
● Directly make the monthly loan payments
for your employees, instead of providing
the benefit in a lump-sum.
Cincinnati City Councilman
P.G. Sittenfeld in 2014
announced the city’s
College Affordability
Assistance Program, which
educates employees about
PSLF and helps them with
the paperwork.
http://files.consumerfinance.gov/f/201308_cfpb_public-service-toolkit.pdf