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For Employers

Applicants Expect Student Debt Relief from Employers

67% of job seekers demand student loan benefits. Discover why they're crucial and how firms can respond.

by John Scully
Mar 25, 2024 12 min read
Nurses and hospital workers picketing for benefits

Key Takeaways

  • Connecting Pay and Education: High college costs and debt are changing what graduates expect from their salary – think student loan repayment benefits, not just high paychecks.
  • Employer Trend Alert: To catch the eye of the best talent, more and more companies include student loan help in their benefits lineup – making them a top pick for Millennials and Gen Z.
  • Job Choices Defined by Loans: When it comes to job hunting, a large chunk of seekers put employers who offer student loan repayment benefits at the front of the line – and they're willing to stick around for it.
  • Education Seen as 'ROI': Students and grads view their degrees as investments worthy of returns like better earnings and benefits (hello, loan repayment assistance!).

Applicants Want More Than Just a Paycheck

The cost of college has skyrocketed over the last few decades. As tuition steadily climbs and student loan debt swells, job seekers are increasingly viewing higher education as an investment. And just as investors expect returns, recent graduates want a return on their educational investment in the form of student loan repayment benefits from employers.

According to a recent survey, nearly 9 in 10 college students say prospective employers should have to contribute to paying off their student loans. This sentiment reflects a paradigm shift in how young job seekers view compensation. It's no longer just about the size of the paycheck - benefits like 401Ks, paid time off, and health insurance have now been joined by student loan repayment on the list of must-have perks for today's applicants.

According to data from the National Center for Education Statistics, the average 2016 graduate entering the workforce with over $51,000 in student loan debt for a post-baccalaureate certificate to $221,800 for a professional degree from a private nonprofit, it's no surprise that compensation packages that help new hires pay down their loans are becoming non-negotiable. Employers who fail to offer these benefits will quickly fall behind in recruiting top talent.

The Rising Cost of College

The cost of attending college in the United States has increased dramatically over the past several decades. According to research from the National Center for Education Statistics, the average annual cost of a four-year public college for an in-state student in the 2020-2021 academic year was $22,180, not including room and board and other expenses. This represents a significant increase from previous decades. For example, in the 1980-1981 academic year, the average annual cost was just $3,800 for tuition, fees, room and board.

Several factors have contributed to the steady rise in college costs that has far outpaced the rate of inflation. Public colleges and universities receive less direct state and local funding today, leading to increases in tuition and fees. There has also been growth in campus amenities and services as colleges compete for students. Salaries for college faculty and administrators have increased as well. The availability of financial aid and loans has enabled students to pay higher tuition. Altogether, these and other factors have caused the cost of college attendance to skyrocket. Students and families today face a very different financial reality compared to previous generations when paying for higher education.

Record Student Loan Debt

Over the past two decades, the total student loan debt in the United States has risen to unprecedented levels. According to data from the Federal Reserve, outstanding student loan debt reached $1.75 trillion in 2022, up from just $240 billion in 2003. This represents a staggering 630% increase over a 20 year period.

Behind these eye-popping aggregate numbers are the struggles of individual borrowers. The average debt load per student has increased in tandem with overall student loan debt. For borrowers graduating with a bachelor's degree, average student loan debt climbed from $18,550 in 2004 to $28,950 in 2019 (in 2020 dollars), an increase of 56%.

This growth in average debt exceeds wage growth over the same period. As a result, student loan payments make up a larger portion of a borrower's paycheck now compared to 20 years ago. This financial squeeze is affecting major life decisions, with many borrowers delaying milestones like getting married, buying a home, or having children.

With total outstanding student loan debt continuing to set new records, and no signs of slowing down, a generation of borrowers are carrying unprecedented loan burdens. The impacts promise to be long-lasting, both for individual borrowers and the broader economy.

College Seen as an Investment

College is increasingly viewed as an investment that will lead to higher earnings rather than just an experience or path to knowledge. With the cost of college rising exponentially, students and families are focused on the return on investment (ROI) of a college degree.

Surveys show that the top reasons students go to college are to get a better job and earn more money. The typical bachelor's degree holder will earn about $1 million more over their lifetime compared to someone with just a high school diploma. Unemployment rates are also lower for those with a college degree versus those with only a high school education.

This ROI mindset shifts how students evaluate college options. They look at rankings related to alumni salaries by school and major. Students aim to minimize debt from their investment by choosing public universities or community colleges for the first couple years.

With college treated as an investment, students expect their degree to pay off with higher earnings that allow them to pay down debt and build savings. This influences their expectations around employer benefits and repayment programs for student loans after graduation.

Focus on ROI

With the skyrocketing costs of higher education, students and parents are increasingly focused on the return on investment (ROI) from a college degree. They want to know - will this degree pay off in the form of higher earnings that justify the expense?

Surveys show that ROI has become one of the top factors in choosing a college major and career path. Students are drawn to majors like engineering, business, and computer science that are linked to high-paying jobs. At the same time, many are questioning whether a liberal arts education is still worth the cost if it doesn't translate directly into a lucrative career path.

This focus on ROI also influences where students choose to attend college. In-state public universities that offer residents discounted tuition are often seen as a better value. Elite private colleges can still justify their high price tags through generous aid packages that reduce the actual cost for families.

But across the board, today's students are laser-focused on emerging from college with a degree that leads to a well-paying job that allows them to quickly pay down their student loans. majors and schools that don't meet that criteria are often passed over, even if they offer high-quality academics.

The ROI analysis also extends to graduate school, with law schools in particular struggling to attract students as the legal job market has shrunk. Getting into top MBA and medical programs is as competitive as ever, since those degrees are linked to six-figure salaries.

In an era of unprecedented student debt, it's no surprise that return on investment has become one of the guiding principles in choosing a college and career path. Students want to know they are getting quality value and strong job prospects for their education dollar.

Demand for Student Loan Repayment Benefits

College tuition costs have risen exponentially in recent decades, leading to a historic student debt crisis. The average college graduate in 2020 owed over $30,000 in student loans. Faced with such high debt burdens, today's graduates are understandably focused on minimizing their loan payments as much as possible after college.

Surveys show that a majority of college students now expect or hope that their future employer will contribute to repaying their student loans as an employee benefit. In one 2019 survey by American Student Assistance, 86% of young workers said they would commit to a company for 5 years in return for a student loan repayment benefit. And over half said they had applied to jobs specifically because the company offered student loan assistance.

Clearly, student loan repayment programs have become a highly sought-after benefit that many graduates expect from employers. Offering such benefits can give companies a competitive advantage in attracting top talent from a generation weighed down by unprecedented loan debt. Recent graduates are drawn to employers who demonstrate that they understand this financial burden and are willing to contribute to solving it.

Prevalence of Loan Repayment Programs

Student loan repayment assistance programs offered by employers have become increasingly common over the last decade. Surveys show just how prevalent these programs have become:

  • A report from Willis Tower Watson found that over 80% of employers now offer some form of student loan repayment benefit. A separate survey from SHRM said 48% of employers offer undergraduate or graduate tuition assistance as a benefit.

  • The prevalence extends beyond just the largest corporations. Over 45% of mid-size companies also provide student loan repayment assistance in some form.

  • Certain industries lead the way in offering repayment benefits, including tech, healthcare, finance, and consulting firms. However, the practice has spread to companies across nearly every sector.

It's clear that student loan assistance has rapidly shifted from a rare perk offered by a handful of companies to a mainstream and widely expected job benefit. With intense competition for top talent, especially among younger employees saddled with record college debt, most employers recognize the need to step up. Offering help with student loans has become a key part of attracting and retaining today's workforce.

Impact on Recruiting and Retention

Student loan repayment benefits are becoming an increasingly important tool for employers looking to attract and retain top talent. With the burden of student loans weighing down millions of Americans, potential employees are carefully evaluating workplace benefits and seeing loan repayment programs as a major incentive.

For employers, offering student loan assistance can provide a strategic advantage in recruiting sought-after candidates, especially Millennials and Gen Z who are entering the workforce with unprecedented levels of college debt. When job seekers see an employer that provides contributions towards paying down loans, it can make a big difference in deciding where to apply or accept an offer. This allows companies to stand out and connect their brand to debt relief.

The benefits continue once employees are on board. Student debt causes financial stress that can hurt productivity and focus. With employers help in repaying loans, workers enjoy greater peace of mind. This leads to higher engagement, morale and loyalty to the company. Employees are also motivated to excel so they remain eligible for continual repayment benefits. The programs help retain talented personnel who might otherwise leave for better offers. Allowing people to pay down debt faster is a powerful way to keep them happy and invested in their workplace.

Student loan assistance gives employers a clear competitive edge. Offering these highly desirable benefits can significantly impact their ability to bring in top applicants and keep them engaged as loyal employees. As more companies adopt repayment programs, they will become a standard part of recruitment and retention strategies.

Looking Ahead

Student loan repayment benefits are poised for continued growth and expansion in the coming years. As college costs and student loan debt continue to climb, repayment assistance is becoming an increasingly important part of the compensation package for many employees.

According to projections from, over 34% of employers in 2023 offered some form of student loan repayment benefit, up from just 8% in 2019. The prevalence of these programs has been rising steadily for years, but the pace is expected to accelerate in the near future.

Employers are realizing they need to provide these benefits to stay competitive in recruiting top talent right out of college. Recent grads are prioritizing employers who directly address their student debt burden. Companies that don't offer repayment programs risk losing prospective hires to competitors who do.

Not only are more employers starting to offer student loan repayment benefits, but existing programs are expanding as well. Rather than just targeting executives, many companies are making these programs accessible to a broader range of employees. The dollar amount of aid is increasing too, with some employers now offering several thousand dollars per year.

With intense competition for skilled workers, expect the student loan crisis to have an ongoing impact on HR policies. Repayment assistance programs are cemented as a core benefit at leading employers. Rather than an outlier, they are the new normal in attracting and retaining recent graduates with mountains of debt. The appeal of reduced loan payments will be a driving factor for millennials and Gen Z job seekers.

Message to Employers

The cost of higher education has skyrocketed in recent decades, leading to a historic rise in student loan debt. With the average student now graduating with over $30,000 in loans, it's no wonder that college is increasingly seen as an investment by students. The expectation is that the high cost will pay off with sufficient career opportunities and earning potential after graduation.

This mindset has led to a major shift in what recent graduates look for in an employer. Job seekers now demand strong student loan repayment benefits as part of their compensation package. With fierce competition for top talent, more and more companies are offering to help pay down student loans in order to attract and retain younger workers.

While loan repayment programs come in many shapes and sizes, they are quickly becoming a must-have for any employer hoping to court millennial and Gen Z talent. Companies that fail to offer these benefits will likely struggle to build their early-career workforce. With no slowdown in sight for the growth of college costs and student debt, student loan assistance seems poised to become a standard workplace perk within the coming decade.

The message for employers is clear, applicants expect you to help them manage their student loan debt. Take steps now to implement a competitive loan repayment benefit program, or risk missing out on tomorrow's workforce.

John Scully

John Scully

John Scully is a seasoned executive leader with a strong background in business operations and technology. As Co-Founder of Paidly Student Loan Benefits, he empowers employers to enhance talent recruitment and retention through a cloud-based platform that allows tax-free student loan payments. With experience in industries like healthcare and fintech, John has held leadership positions at companies such as Sharp Notions and the University of Rochester Medical Center. Holding an MBA from the University of Rochester and a B.S. from Excelsior College, John is dedicated to helping organizations and individuals navigate the complexities of Fintech, especially student loan payments.

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