In the wake of the Great Resignation, employers everywhere are rethinking what it takes to recruit and retain valued employees. For many, that may mean revisiting education benefits—some of which haven’t changed in two decades.
A new report from WTW found that more than 52% of employers surveyed expect to offer counseling for student loan refinancing or consolidation, a sharp increase from 24% in 2021.
WTW also found that about one-third of employers expect to provide contributions for student loans by 2023, up from 8% last year, while the number of employers offering student loan consolidation is expected to surge from 14% in 2021 to 44% by 2023.
Lydia Jilek, senior director, Voluntary Benefits Solutions at WTW, says that a major driver for this change could be the looming expiration of the student loan waiver in August. The federal government has preempted some loan payments for more than two years, since the start of the pandemic. But when that policy lifts, millions of borrowers will be required to start making payments again—and, according to the research, employers are clearly looking to beef up how they handle student loan support to advance recruitment and retention in the current market.
“We have seen mounting interest in the number of employers that want to assist employees with student debt and support the next generation with college coaching and scholarships,” Jilek says. “With the pause on interest and payments on federal loans coming to an end and employers seeking valuable benefit offerings, now is a good time for employers to consider revamping their education benefits.”
The WTW survey found that, currently, the tuition reimbursement market was the best penetrated, with about 80% of employers offering programs and another 8% looking to add them. At the other end of the spectrum, about 8% of employers offered contributions towards student loans with 36% considering adding a contribution program.
Jilek says the number of clients WTW is seeing that are enhancing education benefits is even more impressive given how infrequently such strategies had previously changed. For instance, because the tax-free limits for Section 127 plans have not changed for well over a decade, many employers hadn’t revisited their approaches for some time. The CARES Act, passed in the wake of the pandemic, amended Section 127 to allow employers to make up to $5,250 in tax-advantaged contributions towards an employee’s student loan debt each year.
“Organizations are taking time now to update provisions—perhaps changing waiting periods or adding coverage for books and fees,” Jilek says.
Jilek explains that WTW encourages employers to bring their recruitment teams to the table to relay what they have heard from prospective employees about what is important to them.
“Education benefits—especially student loan repayment—can be very powerful recruiting tools,” she says.
Also, a broad education benefits portfolio can be just as important to retaining existing talent. For example, Jilek says, employers are increasingly allowing children of employees to take advantage of college coaching programs and opening other online tools, calculators and counseling to additional family members.
“I continue to be impressed with the number of clients that are looking towards education benefits as a means of enhancing the employee experience and improving the overall wellbeing of their employee population,” she says. “While not every employee will take advantage of these programs, they are increasingly valued by clients and employees alike.”