6 Reasons Employer Student Loan Repayment Will Remain a Game-Changer

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was created in response to the financial burden caused by the COVID-19 pandemic. Section 2206 of the act allows employers to contribute up to $5,250 tax-free toward employee student loans.

Though contributions remain tax-free, the value of ESLR extends beyond just fiscal perks. Here’s why offering the benefit will remain a game-changer for your company.

6 Reasons to Offer Employer Student Loan Repayment (ESLR)

Download Infographic 6 Reasons to Offer Employer Student Loan Repayment (ESLR)

1. ESLR saves thousands in turnover costs

While the tax break offered by the CARES Act provides a boost for employers assisting with student loan payments, the long-term return on investment (ROI) far outweighs any tax incentives.

Consider the cost of turnover. Losing an employee can cost anywhere from 50% to 200% of their annual salary according to Gallup. Now factor in that employees struggling with student debt are twice as likely to leave their jobs for other opportunities. Regardless of your company’s size, that’s a significant—and preventable—expense.

And the expenses related to hiring and onboarding go beyond financial. You’re also losing productivity, institutional knowledge, and team morale when an employee leaves. Offering student loan assistance reduces voluntary turnover, saving both the direct and hidden costs associated with it.

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2. ESLR adds multiple years to employee tenure

Tenure for employees is the lowest it’s been in over two decades. Today’s workers—especially younger employees who, on average, only stay with a company for 2.7 years—are looking for benefits that go beyond traditional salary packages. With more than half of employees actively job hunting, offering student loan assistance is a strategic way to retain your workforce. According to SHRM, 86% of employees are willing to commit to a company for at least five years if offered ESLR. That means you could save years worth of turnover costs and keep your best employees just by adding student loan assistance as a benefit.

3. ESLR boosts employee productivity

Offering ESLR is far more than a financial perk—it's an investment in your employees' overall wellness. Financial stress, especially from student debt, creates distraction and causes employees to perform below their potential. Employees facing high stress are less productive, less committed, and more likely to seek employment elsewhere. When you ease the burden of student loans with ESLR, you're fostering a more focused, motivated, and loyal workforce.

4. ESLR attracts applicants, many of whom are actively seeking it

ESLR has become a highly attractive benefit to applicants over the last several years. A survey by Betterment found that 77% of employees with student debt are more likely to accept a job offer that comes with student loan assistance. In fact, it’s so desirable that nearly 10% are willing to accept a pay cut in exchange for ESLR. Student loan assistance has become a deciding factor for today's applicant. Offering this benefit ensures your company remains a top contender in their job search.

5. ESLR is non-negotiable for some applicants

On top of being highly attractive, some applicants simply won’t apply to jobs without student loan assistance benefits: nearly 1 in 4 members of the graduating class consider ESLR essential to employment with a company. Given the rising cost of education and the growing burden of student debt, many job seekers see ESLR as a necessity when evaluating potential employers. And it’s not just the incoming workforce: over half of employees believe that employers have a responsibility to help alleviate student loan debt. In a competitive market, ESLR is a key factor in overall job appeal.

6. ESLR is becoming a standard

Industry leaders and innovative companies are already offering ESLR. The number of organizations offering student loan assistance to employees has tripled over the last five years with a third of organizations currently offering or considering student loan repayment programs in the near future. ESLR is no longer a luxury but an emerging standard in benefits packages. By providing student loan assistance, you set your organization ahead of competitors who have yet to embrace it.

Get Ahead with Paidly

The employee landscape is evolving. Applicants and current employees alike are increasingly expecting student loan assistance in the workplace. It’s imperative employers incorporate ESLR into their benefits package to not only attract top talent but also drive long-term employee loyalty and productivity. Paidly is dedicated to helping organizations navigate all aspects of Employer Student Loan Repayment (ESLR), including implementing and managing ESLR benefits. With tailored support and a commitment to innovation, Paidly ensures that your organization stays ahead of the curve.

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Easily offer student loan repayment benefits. Download our free guide or visit our employer benefit page to learn how to relieve employee financial stress.

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ESLR is here to stay

The effectiveness of offering ESLR is clear. From enhancing talent acquisition and retention to gaining a competitive advantage in the industry, contributing toward employee student loans delivers value that far exceeds the tax break. In an era of shifting employee expectations and evolving regulatory landscapes, adopting Employer Student Loan Repayment is a forward-thinking move that positions your organization for long-term success.

It’s not too late to get ahead—Talk to an Expert today.