As more employers look to roll out student loan pay-down plans, which enable them to directly contribute to their employees’ student loan payments, early adopters are singing the praises of this employee benefit and using it in conjunction with broader financial education efforts.
Among them is global audit and consulting firm PricewaterhouseCoopers, one of 200 companies working with Boston-based Gradifi, a leader in student loan pay-down benefit programs and a wholly owned subsidiary of First Republic Bank.
“It’s really fulfilled what we had hoped, as a direct benefit and more broadly,” says Mike Fenlon, the chief people officer at PwC, the first firm to sign up with Gradifi. “We’re strengthening our brand, we’re innovating and we’re being relevant.”
PwC launched its plan in July 2016 after piloting it for nearly a year. According to Fenlon, employee feedback has been terrific—even from people who don’t participate. “Everyone knows a friend, a colleague or a family member who’s been burdened by debt,” he says. The plan has also been an attractive recruiting tool on college campuses, says Fenlon, who is in charge of talent acquisition, employee experiences and learning and development programs at PwC.
Millennials Hit Hardest By Student Loans
More than 8,200 employees—approximately 38 percent of its eligible population—are currently using PwC’s plan. Employees with verified student loans are eligible immediately upon starting employment and remain eligible for six years or until they’re promoted to manager, whichever comes first. PwC says it’s targeting millennials because they’ve been hit the hardest by student loan debt.
PwC pays up to $100 per month, $1,200 a year and $7,200 over six years—figures it determined are material to its employees, says Fenlon. According to the firm, the benefit may help some employees cut two to three years off the life of their loans and reduce their debt obligations by as much as $10,000. PwC also offers employees tuition assistance for graduate and undergraduate studies, regardless of age.
Fenlon credits the pay-down plan’s high participation rate to its ease of use and PwC’s promotional and educational efforts. It makes sure employees understand its contributions are treated as taxable income. To maintain employees’ privacy, PwC doesn’t access their student debt balances, which are housed on Gradifi’s system.
PwC’s pay-down plan is tied to its broader commitment to financial literacy, says Fenlon. The firm offers employees financial planning tools, educational webcasts and online videos, and access to LifeWorks, an employee assistance provider. LifeWorks offers resources on such topics as budgeting, home buying, managing debt, setting savings goals and planning for education costs.
Natixis Global Asset Management, another early adopter of Gradifi, is also pleased with the initial results of its student loan pay-down plan.