The combination of a demand for talented labor and federal student loan payments resuming in February is causing some companies to publicize new perks for their workers.
Last week, Fidelity Investments announced that it is planning to bump up the maximum lifetime amount it contributes to help employees pay down student loans to $15,000 in December, up from the current limit of $10,000.
Another company, MassMutual, is taking a different approach. Starting next year, it is allowing its workers to convert up to five days of vacation time to student loan payments or contributions to 529 college savings accounts, the insurer announced on Thursday.
Both financial services companies cited the high preponderance of college debt carried into the workforce at the start of people’s careers. Fidelity also tied its announcement to the start of federal loan payments resuming early next year.
Along with the bump in maximum lifetime contributions the company is willing to make, it is also waiving a requirement that employees be at the company for six months before being eligible. Starting next year, they can start receiving those payments immediately, according to the company.
“[W]e know these programs can help put people on a path to achieving their long-term financial goals,” Tom Vogel, head of financial benefits at Fidelity, said in the announcement. “We expect more than 5,000 Fidelity associates may benefit from this competitive program.”
Fidelity added that perk, Step Ahead, in 2016 and has since made a similar option available to its employer clients. The company has contributed about $58 million in principal payments and $27 million in interest to more than 12,000 of its employees.
Figures from plan sponsors use Fidelity’s student loan benefits program report a 78% average turnover decrease among workers with student loans.
And Fidelity has much incentive to offer creative perks to new workers. The company is at the start of an initiative to hire 9,000 people, mostly for customer service and tech positions.
The student debt trend has affected workers of all ages, the company noted. Gen-Z members enter the workforce with an average of nearly $28,000 in student loan debt -- about twice the amount that baby boomers carry, according to Fidelity data as of Sept. 30.
Older workers, however, often take out loans to help pay for college for children or grandchildren -- and many appear to be taking out loans from their 401(k)s in order to help with that. Baby boomers with student loan debt are nearly twice as likely to borrow from 401(k)s as those without such loans, at 30% and 17%, respectively. For Gen Xers, those rates are 32% and 23%, according to the firm.
In addition to its new policy for cashing out unused vacation time for student loan payments, MassMutual reimburses employees for approved educational courses, degree programs and professional designations, a spokesperson said in an email. The company did not have details about the average unused vacation time balance among its employees.
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