College grads will love the newest workplace perk

Student debt assistance may shape up to be the hot new workplace benefit in 2016—the kind of perk that serves to attract top talent by promising to relieve workers of onerous student debt.

Boston-based global asset management firm Natixis and private lending startup CommonBond both announced new student loan benefits for their workers this week. The companies follow in the footsteps of accounting firm PwC and online bookseller Chegg.com, which rolled out student debt payoff programs for workers earlier this year.

Finding a way to appeal to a younger workforce makes sense for employers. Millennials recently dethroned Generation X as the largest generation in the workforce.

Ed Farrington, head of the Natixis’ retirement practice, was giving a talk on retirement savings at a class at the University of New Hampshire last January when a student approached him with an idea: Most college graduates are going to enter the workforce with too much student loan debt to even begin thinking about retirement. Why not help them out?

“This spurred from our desire to try and make it easier for younger people to begin saving and to save more at a younger age,” Farrington said. Also, being a global asset management firm, Natixis had access to survey data that showed student loan debt posed a substantial burden to young people looking to save for retirement. “We just wanted to do what we could today to help folks who [can’t save because of student debt].”

Student loan payoff programs may be gaining in popularity but they are far from ubiquitous. Only 3% of companies offer loan repayment programs so far. Yet, so-called “Loan Repayment Assistance Plans” (LRAPs), offered by some colleges and state governments, have been around for years. These plans are typically reserved for jobs that often require a lot of (very expensive) education, such as medicine, law, and STEM fields. But some states like Wyoming and Illinois also use LRAPs to attract teaching talent to otherwise unattractive school districts. (Studentloanhero.com has as great running list of LRAPs in the U.S.)

Here’s a breakdown of how new programs offered by Natixis, CommonBond, PwC and Chegg work.

Natixis

How much: $10,000 over six years—$5,000 up front, then $1,000 each consecutive year until workers reach $10,000

Who qualifies: Employees who have worked for the company at least five years

How to get it: Natixis will issue the benefit like a regular paycheck. The workers will be free to use it for any outstanding student loans. The company will not follow up to be sure the cash goes toward debt however, a process that would prove too difficult to maintain.

The fine print: The cash will be taxed like a bonus, so the overall benefit will likely be much lower than $10,000. The money can also only be used for federal Stafford or Perkins loans.

When: Beginning Jan. 1, 2016

CommonBond

How much: $100 per month indefinitely. This is a huge advantage over other student debt payoff benefits, which typically have caps ($7200 at PwC and $10,000 at Natixis, for example). A CommonBond spokesperson confirms the company will keep slipping workers $100 a month “until the loan is fully paid off, so long as the person is employed at CommonBond.”

Who qualifies: anyone who works at CommonBond

The fine print: The benefit will be taxed.

When: The perk started in December 2015.

Chegg

How much: $1,000 per year indefinitely, for as long as the worker stays with Chegg

Who qualifies: Any full-time Chegg employee with outstanding loan debt

How to get it: Chegg partners with student loan payment site Tuition.io. Workers set up a profile, funds are sent to Tuition.io and are then sent directly to their student loan servicer.

The fine print: (You guessed it!) The benefit is treated like taxable income. But it can be used for both private and federal loans.

When: The program began in April 2015.

PwC

How much: $1200 per year for up to six years, for a total of $7,200.

Who qualifies: Full-time PwC employees who hold associate or senior associate titles (45% of the company’s 46,000-strong workforce)

How to get it: PwC is using a new platform created by a startup called Gradifi. It’s called “Student Loan Paydown.” Companies contribute directly toward an employee’s student loan principal on a monthly basis. Gradifi distributes those funds to loan servicers.

The fine print: The benefit will be taxed and is capped at $7200.

When: July 2016

Read more:

The Hidden Geniuses of Silicon Valley

NFL's first female coach has a special message for men

Paying off student debt will get easier for 5 million borrowers

Mandi Woodruff is a reporter for Yahoo Finance and host of Brown Ambition, a new podcast about career and finance. Follow her on Tumblr or Facebook

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