NEW ORLEANS — Though student loan benefits are gaining a lot of attention, they still aren’t a common workplace perk. Just 4% of employers offer student loan repayment benefits, according to statistics from the Society for Human Resource Management, in part due to employer concerns over the benefit’s funding, administration or ROI.
But benefits managers at Estée Lauder and financial firm Options Clearing Corp. have a message for employers: A student loan benefit is not hugely expensive, nor is it hard to administer. Even more importantly, it can have a big payoff for organizations.
“It’s a relatively easy program to fund by cutting from somewhere else, like compensation. Plus, it’s widely popular,” Erin Smith, first vice president of total rewards at Options Clearing Corporation, said Tuesday at the Benefits Forum & Expo in New Orleans.
Her company, a Chicago-based financial services firm with about 740 employees, implemented a student loan benefit at the beginning of this year, with the company contributing $100 monthly to an employee’s student loan balance. The contribution caps at $10,000.
“Financial wellness is our brand, so we wanted to roll out something consistent with our brand,” Smith said. “I sit in for the first 15 minutes in new hire orientation sessions, and it’s for sure the most talked-about benefit.” More than 70 employees signed up within the first month when OCC announced the new perk, which is administered by Fidelity Investments.
Meanwhile,
“When we look to attract and retain talent, we look to be bold in certain spaces,” said Latricia Parker, executive director of global benefits of the Estée Lauder Cos. “We looked at employee concerns and saw that student debt stresses rose to the top.”
Of the 6,300 Estée Lauder employees who are eligible for the benefit — the company’s retail population is excluded because of the profession’s high turnover, Parker said — 830 employees are participating.
“Because of the value, it was one of the easiest benefits I ever had to pitch,” Parker said. “I didn’t even realize how much it would resonate with our employees.” Though the company’s high millennial population — roughly 67% of Estée Lauder’s employees are of that generation, she said — are flocking to the benefit, it’s “overwhelmingly popular” among the company’s older populations, too.
Statistics point to a widespread problem: Seven in 10 college graduates have student loan debt, and the average person leaves school $30,000 in arrears. Nearly 20% owe more than $100,000.
As for cost, Parker said, the company anticipated 20% of its population would enroll in the benefit, but just 14% has so far. That’s saving Estée Lauder some money, she said, and giving her the chance to “think about doing more with the benefit.” The company might reconsider eligibility requirements and is also looking at rolling out a similar benefit to its workers in Canada and the United Kingdom.
OCC, on the other hand, funded its student loan benefit by prioritizing it over other benefits, Smith said.
“We were considering changes to our retirement plan and whether we should move to immediate vesting,” she said. In order to recruit and retain critical talent, OCC’s executive committee decided that the value of the student debt program “was higher than any reduction in our vesting schedule on our retirement plan,” she said. “And it was a much smaller investment to make as well.”
To other employers worried about the cost of providing the benefit, Smith said it can be done easily: “It’s a fairly small investment to make when you look at your total rewards package,” she said. “There’s pretty easy money to find in your compensation budget — you can shave a little off your executive compensation budget — without really making a big difference. It’s not a terribly expensive benefit to fund.”
