When looking for a job, the benefits offered to an Employee are definitely a big factor in consideration of accepting an offer of employment. Most people are willing to choose a company with a slight pay decrease if the benefit package compensates for the lost wages. With unemployment the lowest it has been since 2000 in the United States, attracting new talent isn’t as easy as it used to be and Employers are looking for ways to snatch up qualified applicants.
When you think of benefit packages, you usually think of the basics: Health Insurance (with possibly an HSA, HRA, or FSA included), Dental and Vision coverage. “Good” benefit packages usually go beyond by offering Supplemental Policies to fill in the gaps of your coverage as well as retirement accounts such as a 401K where the Employer can match what is put in, up to a certain amount.
While investing in your retirement is essential, 66% of employees offered a matching 401K do not utilize it leaving about $24,000,000,000 (that’s BILLON) worth of unclaimed Employer matches on the table. Why isn’t the younger generation investing in their future? Student Loan Debt.
What most people fail to realize that an entry level position requires at least a Bachelor’s Degree. That degree, on average leaves someone with over $30,000 in debt. In fact, Student Loan Debt has surpassed Credit Card debts by over $521,000,000,000 (once again that’s BILLIONS). With the average Student Loan payment at about $393/month for an Undergraduate degree, it becomes more clear why someone entering those entry level positions can simply not afford to pay into a 401K at this time. Another startling fact, 48% of borrowers default on their Student within 12 years.
Savvy Employers are seeing a gap in their benefit packages that can be filled by offering a repayment program like a 401K.. but instead of matching contributions towards retirement, they would match contributions towards Student Loan Debt. By offering their Employees this kind of benefit, they are more likely to not only draw in more qualified talent, but the retention rate and employee satisfaction would be remarkable.
In February 2017, H.R.795 – Employer Participation in Student Loan Assistance Act was introduced in the House of Representatives. It was then referred to the House Committee on Ways and Means, where it hasn’t been really discussed since. Under current law, Sec. 127 of the Internal Revenue Code, Employers to contribute a tax-exempt benefit of $5,250 in tuition assistance to employees currently in school (tuition assistance); However, it doesn’t specify a matching program for student debt after the Employee graduates (when they’re most likely to be hired in their field). H.R. 795 would expand this benefit to allow employers to make the same contribution to employees who have completed their education. That means that an Employee can essentially pay $10,500/yr towards their Student loan debt, a MAJOR pay off.
This bill is important for many and should be looked into more. The world of Employee Benefits is changing rapidly and Congress should keep up. By approving this, it can save people thousands of dollars, keep people from becoming delinquent on their debts and gives Employers a step up in attracting new Employees.
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