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Student debt: A $1.6 trillion problem

As employees drown in school debt, a growing number of companies are getting educated on how to best help them—and getting creative with plan design.
By: | February 18, 2020 • 5 min read
Serena Haming celebrates paying off nearly $18,000 in student-loan debt in 18 months, with assistance from her employer, Trilogy Health Services.

Serena Haming graduated from the University of Louisville in 2018 with a degree in business marketing, a job waiting for her—and $15,000 in student-loan debt.

“I graduated in May, and by December, I already had another $2,000 in interest that accrued,” she says. “Looking at that huge number was just such a burden.”

But she had a rare ally to help her pay off her debt: her employer, Trilogy Health Services.

The senior-care provider company gave Haming and other employees $250 a quarter toward their loans, last year upping its contribution to $100 a month. “We get paid once a week at Trilogy, and every week I would put part of my paycheck toward paying it off, and once a month I could see Trilogy’s $100 payment, which really impacted the interest over time.”

Serena Haming

Haming was set on paying off her loans in a short time, and by the end of last year, she did just that—all $17,971.36 in 18 months.

“People don’t really talk about the moment of paying off your debt and that feeling of weight off your shoulders,” she says. “To have a company that backs you up and showcases that was really powerful for me.”

Trilogy is one of the growing number of employers stepping in to help their workers pay down education debt. Companies including Aetna, the Hartford, Estée Lauder, Staples, Sotheby’s and Unum have rolled out student-loan benefits as employers see the effect student debt is wreaking on the workforce.

Today, about 8% of employers offer a student-debt benefit, up from 4% last year, according to the latest available data from the Society for Human Resource Management. But insiders expect that number to grow.

“I think [student-loan benefits] will continue to become more mainstream—[they] already [have],” says Carl Gagnon, assistant vice president of global financial wellbeing at Unum, which started offering the benefit in January. “Student-loan debt has tripled over the past decade and continues to impact workers’ finances, their focus at work and their ability to save. With unemployment low but wages relatively stagnant, employers are looking to expand their benefits offering to provide more value to employees, and this is one way they can do that.”

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Though they’ve been around for a couple years, student-loan benefits—being discussed in a panel session at HRE’s Health and Benefits Leadership Conference in April—are still a new proposition for many employers. But, as the labor market tightens, employers are being forced to come up with strong solutions for recruiting—and keeping—talent. And that includes enviable benefit options that employees are clamoring for, including student-debt assistance.

“[When we talk to companies], if a big employer in their market already has a student-loan benefit, the conversation quickly becomes, ‘I need to do this from a talent perspective; my competitor is offering this.’ This is happening furiously as a result of that,” says Scott Thompson, CEO of student-loan-benefit provider Tuition.io, adding that the last couple of years have been “night and day” in terms of employer awareness of the benefit.

Not only that, but employers are getting more creative with the benefit, from chipping in payments and offering ways to refinance debt to tying loan payments to retirement accounts or allowing employees to trade in paid time off for a contribution toward their loans.

“Employers see the need, they understand the need, they want to do this,” Thompson says. “More and more are saying, ‘I need to find a way to do this, and I need to do it now.’ It’s much more about creative plan design and use of benefit dollars, finding the money to afford the benefit.”

Helping with Financial Stress

Student-loan benefits are part of a bigger trend of helping employees ease financial stress—a frequent and growing problem among the workforce. Data from financial firm John Hancock shows that 69% of workers are stressed about their finances, with 72% admitting to worrying about their personal finances at work, and one in three doing so more than once a week.

Not only does financial stress take a big toll on employees’ health—it can result in everything from depression and anxiety to migraines, ulcers and heart issues—but it also takes a hard hit on employers. Employees with money issues typically suffer from presenteeism and absenteeism and are less productive.

For many employees, student-loan debt is one of their biggest financial stressors. Overall, student-loan debt collectively tops $1.6 trillion, according to the Federal Reserve, and the average person leaves school more than $30,000 in arrears—statistics spurring a growing number of HR professionals to look at student-loan benefits to help.


The number of employees with debt was the catalyst for launching the benefit at Northern Rivers Family of Services, a New York-based nonprofit, explains Linda Daley, the organization’s chief human resources officer. About 65% of Northern Rivers’ 1,400 employees hold a bachelor’s degree or higher, and many are saddled with student-loan debt.

“We’re aware that our employees are not immune to the burden of this financial stress,” she says. “The goal for many of our employees is to chip away at as much of their student debt as possible, and every little bit from Northern Rivers helps.”

The employer contributes a minimum of $35 every month toward eligible employees’ student loans, and it is budgeting $150,000 annually for the benefit. The program, which is in partnership with provider IonTuition, aims to help employees to repay their debt faster and save money on interest.

Meanwhile, workers at Trilogy Health Services collectively hold more than $36 million in student-loan debt, with each employee owing an average of $31,668, says Todd Schmiedeler, the company’s senior vice president of foundation and workforce development.

“When we heard that, that made a real impression on how we could help our people. It just shows us how many people are really in crisis around this debt [problem],” he says. “That debt is scary—it delays home-buying, it delays getting assets. It slows people’s ability to feel like they’re making a way for themselves.”

Nearly 1,500 employees—the company has 15,000—currently take advantage of its student-loan-repayment benefit, but Schmiedeler expects that number to grow.

“We hear such great response from it,” he says. “I had people that hugged me and cried when they were helped to pay off their debt. That makes us feel good about what we do.”

Taking a New Approach

Montefiore St. Luke’s Cornwall, a not-for-profit community hospital with campuses in Newburgh and Cornwall, N.Y., last year announced its own unique student-loan benefit.

Through the new program with Tuition.io, MSLC’s 2,000 employees can transfer their unused paid time off to the repayment of their student debt, including federal and Parent PLUS loans. Eligible employees can convert 30 to 75 hours of unused PTO into payment against student debt, which will be distributed semi-annually, with a maximum $5,000 annual contribution, the company says. The program is now available to non-union, full-time and part-time employees, and the hospital says it soon plans to expand the initiative to include unionized employees.

The program has garnered positive feedback and results, says Dan Bengyak, MSLC’s vice president of administrative services, especially because those working in the medical field are especially saddled with debt. More than 50 participants so far have signed up for the program, and nearly $90,000 has been paid out.

“Medical graduates are often faced with what can seem like an insurmountable amount of debt as they transition from student to medical professional,” he says, adding that the program is “at the forefront of employee benefits and squarely addresses the very real challenges faced by thousands of workers.” Medical students bear a larger-than-average financial burden after graduation. Three-quarters of medical students leave school with education debt, holding an average balance of $196,000.


Montefiore St. Luke’s Cornwall benefit is similar to that of Unum, which launched its own student-loan benefit tied to PTO in January. Employees of the insurance company can transfer up to five days, or 40 hours, of carry-over paid time off into a payment against student debt through a program managed by Fidelity Investments. The payment is based on an employee’s hourly rate. So, if an Unum employee who is making $50,000 a year decided to transfer five days of PTO into a payment toward his student debt, that would equate to an annual $961 payment toward student debt.

It’s too soon to tell how the benefit is going, but employee reaction has been positive, Gagnon says. He estimates about 30% of Unum’s workforce carries student debt and that 500-700 employees may take advantage of the program.

Though having employees decide between taking a vacation or paying off loans may seem like a difficult option to present, most workers leave vacation time on the table. In 2018, American workers gave up about $62.2 billion in lost benefits by forfeiting more than 200 million vacation days that could not be rolled over, according to Project: Time Off, which is sponsored by the U.S. Travel Association.

“About 40%-50% of our employees carry over unused PTO each year, so the foundation was already in place,” Gagnon says. “All we had to do was give them another choice in how they use that carry-over benefit.” Beginning in their first year at Unum, full-time employees receive 28 days of paid time off, including holidays and personal days, with additional PTO available over time. Each year, employees can carry over up to five days of unused paid time.

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“Not every employee with student debt will take advantage of the program, and that’s OK,” he says. “We want employees to choose which benefits work best for their unique situation, preferences and lifestyle. This option gives them more choice in how they use their benefits.”

Retaining, Recruiting Employees

Of course, student-loan benefits are a costly bet for employers. Employers are allotting hundreds of thousands or millions annually for the benefit—which can temper some employers’ urgency to implement the perk, especially when they are already trying to control ever-increasing healthcare costs.

“A lot of companies have financial pressures, and if you do the math on this benefit and call it at $100 a month, it can be a lot of money,” Thompson says. “If you’re a 2,000-3,000 [-person] employer, all of a sudden you can be in $10-$20 million of expense. The CFOs look at this and say, ‘We’re already spending X percent on top of a person’s salary on benefits.’ ”

Scott Thompson, CEO of Tuition.io

That’s where other solutions come in—like allowing employees to trade in paid time off for a payment or providing financial-education resources on how to cope and pay off debt as part of a wellness program. Thompson says the wellness integration is a trend that’s picking up.

“We’re starting a lot of wellness-first relationships with very large employers, where the employer says, ‘Look, I want to help my workforce, but I don’t have the budget to do a contribution at this point. Let’s take this first step of getting these wellness and education tools first, then figure out how to add a contribution later.’”

Overall, proponents argue the benefit, notably repayment programs, pays for itself with reduced turnover, increased employee satisfaction and of course a bigger boost to attraction and retention efforts. In addition to showing positive feel-good reaction from employees, Trilogy says, its student-loan-repayment benefit has seen “tremendous success” on retention. Trilogy employees who use the benefit stay 2.5 times longer than those who aren’t signed up for the program—a significant stat in the healthcare industry, which typically has record-high turnover rates.

“This just shows that these kinds of programs are really making an impact,” Schmiedeler says.

Trilogy employee Haming agrees, saying she feels more dedicated to Trilogy because of the benefit and hopes other employers follow to make meaningful change for employees with debt.

“It makes sense for other companies to hop on the bandwagon,” she says. “There’s way too many pros to cons.”

 Don’t miss the panel on student-loan benefits at HRE’s Health and Benefits Leadership Conference, held April 15-17 at the Aria Resort & Casino in Las Vegas. To register, visit benefitsconf.com

Kathryn Mayer is HRE’s benefits editor and chair of the Health & Benefits Leadership Conference. She has covered benefits for the better part of a decade, and her stories have won multiple awards, including a Jesse H. Neal Award and honors from the American Society of Business Publication Editors and the National Federation of Press Women. She holds bachelor’s and master’s degrees from the University of Denver. She can be reached at kmayer@lrp.com.

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