Preparing for the Talent Storm: Student Loan Benefits for Recruitment & Retention
As skilled worker shortages loom, student loan repayment benefits give employers a practical way to attract early-career talent and retain valuable employees.
Key Takeaways
- The skilled worker shortage may be more serious than the current labor market suggests according to a recent report by SHRM.
- Retiring employees and growing skills gaps are creating challenges for recruitment and retention.
- Traditional benefits may not meet every employee's needs. Early-career employees are often carrying student debt, a financial burden that sways career decisions.
- Student debt and limited savings means financial wellness is an expected part of the employee benefits conversation.
- Employers can take practical steps now to add student loan repayment to their benefits offerings. Talk to an Expert or get started with Paidly today.
On paper, 2026's labor market has looked calm: steady hiring, contained layoffs, and few headlines pointing toward workplace shortages. But SHRM's latest HR Quarterly Labor Outlook warns this is just the calm before the fight for skilled employees.
And that fight has already started: 68% of HR professionals are struggling to recruit full-time employees and 42% have difficulty retaining the full-time people they already have.
We’re headed for the next talent storm. Here’s what’s going on and what you can do to prepare.
The skilled employee gap
Our stable labor market is an illusion. Boomers who delayed retirement are beginning to leave and they’re taking decades of know-how with them. SHRM found 80% of HR professionals are struggling to find candidates with the skills older generations are taking with them, like strategic decision-making, complex problem-solving, and time management.
Employers need to bring in early-career talent they can develop into the new keepers of institutional knowledge. That means we need to think about what actually gets a hardworking and talented 26-year-old to pick a company early in their career and choose to stay.
Career-ready workers often come with student debt
The next generation of workers is holding major student debt. Roughly 43 million Americans have federal student loans, averaging $40,467 per borrower. It’s not just graduates; parents are carrying it too: 3.5 million owe $115 billion in Parent PLUS loans.
The financial burden caused by student debt follows people to work and beyond. Gallagher's 2026 US Workforce Trends report found:
- 51% of employees have less than 3 months emergency savings (27% have no emergency savings at all)
- Only 28% of employees believe their retirement savings strategy will allow them to reach their goals
- 91% of employees connect financial stress to mental health
As a result, 45% of employers say financial wellbeing has become increasingly important to their organization. And employees agree! Over half of workers believe their workplace should help with student loan payments. Despite knowing the problem – and the solution – most companies just haven't changed what they offer.
Traditional benefits aren’t enticing enough
According to Gallagher’s study, 85% of employers offer a retirement plan and more than two thirds help with tuition, but only 14% of companies offer student loan repayment contributions.
One way to aid retirement and student debt is through a [401(k) match for student loans](/blog/401k-match-for-student-loans. SECURE 2.0 lets employers match retirement contributions with student loan payments, which makes it an easy solution. However, the report found only 2% of employers offer student loan 401(k) matching and just 6% are even considering it. The 401(k) workaround hasn't caught on.
In reality, a retirement contribution doesn't touch the financial burden employees are facing right now. For a new grad staring at loan payments every month, help in 40 years doesn’t compete with receiving help today.
Offering student loan repayment and 529 contributions
Offering 401(k) contributions is no longer enough. Student loan repayment is what the modern workforce needs, and Congress recently made it permanently tax-free.
What began as a temporary CARES Act provision is now a permanent tax advantage with the One Big Beautiful Bill Act. Under a Section 127 plan, employers can contribute up to $5,250 a year toward an employee's student loans, tax-free to both employee and employer.
Loan repayment speaks directly to the early-career talent employers need right now. 529 college savings contributions extend the same benefit to parents and employees saving for a child's education. Together, they cover the whole education lifecycle and they answer the most common concern: offering benefits that every employee can take advantage of.
What to do before the talent storm hits
Here’s how you can prepare your company to compete for skilled workers:
- Find out who's carrying debt. Survey your workforce. How many have student loans? Who hasn’t been contributing to a 401(k)?
- Set your goal. Pick a metric to improve: offer-accept rate, new-grad retention, voluntary turnover.
- Put together a Section 127 plan. A written plan is required for tax-free treatment along with nondiscrimination testing and an employee notice.
- Launch your benefit. Paidly sends contributions straight to loan servicers and 529 plans, with no HRIS integration required.
- Talk it up! A benefit nobody understands doesn't recruit anyone. Lead with it in offers and onboarding.
Ready to see what student loan repayment and 529 contributions could do for your team? Talk to an Expert or start your Paidly benefit today.
Ready to get started?
Team Paidly
Paidly is the go-to platform for rising above student debt. We specialize in innovative solutions, such as employer student loan assistance benefits, streamlined 529 plan contributions, and crowdfunding tools for individuals and their families. Backed by nearly two decades of experience in financial technology, Paidly is committed to simplifying student loan repayment, reducing loan dependency, and empowering students to take control of their finances no matter where they are in their educational journey.
Stay Ahead of the Curve
Get the latest insights on student loan repayment, 529 contributions, and maximizing employer benefits delivered to your inbox.
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Paidly shall have no liability for the information provided. While care has been taken to produce this document, Paidly does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.
You may also like
Why I Started Paidly
We set out to stop student debt from making life decisions for employees.
The HR Guide to Using Your Entire Education Budget
Your education budget can do a lot more than just pay for tuition. Learn how adding student loan repayment can expand your benefits without expanding your budget.
Education Benefits You Should Know About
Education benefits like 529 savings, tuition reimbursement, and student loan repayment can help you reduce education costs during every stage of your career.