401k/Student Loan Repayment Program Introduced by Thrive
CLEVELAND, OH, March 7, 2019 -- Student loan debt is having a tremendous impact on millennials' lives. It is influencing where employees work, and how they live and spend their money. College graduates with student loans want help from employers tackling this issue.
Employers are getting the message. To hire and retain college graduates, companies are adding student loan assistance programs. The challenge to employers is providing meaningful assistance without breaking the bank.
The statistics are staggering:
Challenge to Employers: Building a Much-Needed NEW Employee Benefit
While recent graduates feel tremendous stress in paying their student loans, employers feel a different stress. Many are in a war for talent. The competition for college-educated workers is not new, but in today's labor market it is more intense than ever before. As of November 2018, the national unemployment rate was just 3.7%, and unemployment for college graduates was only 2.0%.
For companies whose success relies on professionals, bringing aboard and retaining high-quality talent is a top priority. For the prospective employee, salary is only one consideration with creative and meaningful benefits packages becoming a competitive necessity. A recent Forbes.com headline termed student loan repayment "The Job Perk of the Future."
Clearly, employers are taking note. While only 4% of companies offered student loan assistance in 2018, this is expected to increase by 24% in 2019.
How Companies Are Currently Providing Student Loan Assistance
Some companies are beginning to provide direct student loan repayment assistance by contributing an amount to their employees' student loans. However, direct contributions are a major expense to employers. If ABC Company provides $150 of student loan assistance per month to a participant, that is $1,800 annually. If 200 employees participate, the total cost would be $360,000 per year. Even if ABC Company attempts to cap their per employee lifetime exposure to $10,000 per employee, they are still shelling out $2,000,000 in incremental expenses.
A New and Innovative Budget Neutral Idea: Using Matching Dollars for Student Loan Repayment
David Krasnow, a leading national retirement plan advisor, has heard the call from his corporate clients for the last 2 ½ years to help their employees struggling with student loan debt. In 2018, Krasnow partnered with BenefitEd to offer a new, cutting-edge, budget-neutral employee benefit company called Thrive: Flexible Matching Program.
Thrive is a unique innovation that empowers employees to decide where to allocate their contributions, as well as where they will receive their employer match. For example, if an employer's retirement plan has a matching provision of 5%, an employee can determine how much of their 5% match to allocate to retirement and how much to their student loan debt.
The result is a customized retirement and student loan repayment program, with flexible matching. Thrive allows employers to provide a "Wow" benefit that is budget neutral by simply allowing employees to allocate existing matching dollars without an additional cost to an employer.
Research shows Thrive will have tremendous impact on employees with student loans because:
As companies evaluate and consider student loan assistance programs, Thrive's innovation of using existing employer matching dollars to help employees repay their student loans -- without increasing their benefits budget -- is breaking new and much-needed ground. This program is likely to become an important benefit for millennials and an important tool for leading-edge employers in appealing to employees.
To learn more about Thrive, visit www.thrivematching.com or call 216-595-0700.
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