Why Student Loan Repayment Is Not the Benefit You Should Offer in 2019

by Evil HR Lady on October 8, 2018

Americans are drowning in student loan debt. The average person (as of 2016) graduates with $37,172 in debt. That’s a tremendous burden and businesses are doing the right thing in helping their employees pay down this debt.

That’s the general consensus, but it’s not actually the best use of your benefit dollars. Here’s why.

Student loans are voluntary

Yes, rich kids can get through school without student loans, Yay. But, I’m not talking about that. You choose where you go to school. Or, at least, you choose where you apply. There are good choices and bad choices. A choice to go into massive debt for a degree which doesn’t have a high return on investment is a bad choice. If you’ve chosen massive debt for a degree that does have a high ROI, well, that’s a choice you’ve made.

By giving new employees money for paying down debt, you reward the bad choices and encourage current students to take more loans.

To keep reading, click here: Why Student Loan Repayment Is Not the Benefit You Should Offer in 2019

{ 17 comments… read them below or add one }

Mr College October 8, 2018 at 1:03 pm

Worse is co-signing your child’s student loans: if, heaven forbid, your child dies, you’re stuck with the student debt.
https://wtvr.com/2014/07/29/after-daughters-death-grieving-parents-are-sent-her-student-loan/comment-page-1/

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parker davis October 8, 2018 at 1:10 pm

Totally agree, student loan payment is a bad use of benefit dollars. It rewards those who made bad choices in funding college expenses.
The other benefit, greatly loved by companies, is tuition refund programs. Unless you are a very large company, with a definite career/promotional path, paying to educate an employee is usually spending dollars so the employee can find another job.

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the gold digger October 10, 2018 at 5:31 pm

Whoa. Way harsh, Tai.

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Chris Hogg October 8, 2018 at 2:02 pm

Uhh, Evil, I’m starting to become concerned about your outlook on life. You seem to be saying that choices have consequences, and that people are responsible for, and must live with the results of their choices. I don’t know what it’s like where you live, but here in the United States we take the view that even if choices have consequences, the choice maker is not responsible. A few examples come to mind: Our government is around $20 trillion in debt, but not to worry, our grandchildren will cover it. I may have made bad college loan decisions, but not to worry, my employer will cover it. I may be a druggie and can’t or won’t work, but not to worry, the government will cover me (just pay no attention to that massive debt behind the curtain). I may practice promiscuous sex with whoever, but if I get pregnant I can always get an abortion, and if I get an STD ( or HIV) I’ll just stop in to the clinic down the street and take care of it. Really, Evil, what are you thinking?

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Mr Guffaw October 8, 2018 at 2:43 pm

She’s Evil!

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Bob in HR October 8, 2018 at 3:00 pm

Another reason we won’t do this: I also have employees who struggle to pay their mortgage/rent/car payments/credit cards. I have not been able to figure out how to explain why student loan debt is different than those debts.

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sikulas October 8, 2018 at 3:17 pm

One difference is that in a worst case scenario, all of those other debts can be relieved through bankruptcy procedures. Student Loans debts can not.

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Bob in HR October 8, 2018 at 5:19 pm

That is not enough to justify different treatment though.

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grannybunny October 10, 2018 at 5:23 pm

Presumably, the education funded by that debt benefits the employer.

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GreenDoor October 8, 2018 at 5:17 pm

Totally agree with the fact that this rewards poor choices. I busted my butt working 70 hours a week, took public transit, to support myself and put myself through my local university and because of that, graduated debt free in the early 2000’s. If I found out that my coworker who had to have the “college experience” at an out of state school and got spending money from mommy and daddy and never had to work so they could “focus on their studies” got school loan repayment funds as a benefit that I couldn’t receive simly becasue I worked hard and was fiscally responsible, I’d be hella pissed.

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Elizabeth West October 8, 2018 at 6:56 pm

I don’t necessarily think that student loans are a poor choice–y’all are equating it with borrowing for some kind of luxury. If entry-level jobs keep requiring degrees and colleges keep jacking up tuition rates, then workers will still end up needing loans just to remain competitive. I seriously saw an ad for a cashier at Lowes that asked for an associate degree. A CASHIER. I am not making this up!

However, I agree that loan relief doesn’t need to be a benefit. Just pay employees well and they can pay down their loans. And stop requiring a college degree for entry-level jobs that have no upward mobility (i.e. most of them).

I also like the idea of an opt-out 401K. One of my past jobs required it and I didn’t make enough money to contribute anything. Therefore, when the company laid me and other workers off, I didn’t have enough in the account to roll it over and had to take a disbursement, which meant a tax penalty. If I could have opted out of the 401K, I could have just put that portion of my paycheck aside after income taxes had already been taken out. It’s detrimental to lower-income employees. Not to mention that many will never be able to retire anyway.

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GreenDoor October 8, 2018 at 7:08 pm

“And stop requiring a college degree for entry-level jobs that have no upward mobility” Yes to this! And stop rejecting candidates with vast experience just because they have no degree.

Although the Lowe’s thing I can see to a certain extent. Lowe’s and Home Depot have floor clerks that actually know their departments. So it helps to have an associates degree in framing, pluming, electric, etc. But even then, my favorite Home Depot clerk is this old timer that i”m sure has no degree – but who probably has a good 40 years in the industry under his belt. But a cashier job? Just…no

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Goober October 9, 2018 at 1:38 am

I work in the same area of retail as Lowe’s and Home Depot. No, it makes no sense whatsoever to require, or even care about, an associate degree for a sales associate making minimum wage or barely more. In theory, it’s a way of shifting the cost of training from the company to the employee (which is pretty unethical in and of itself, IMO), and given that few college degrees teach anything of any practical use in retail, it does that poorly.

If they want employees who know what they’re selling, they need a product knowledge training program, like my employer has, at considerable expense. People go to Home Depot for cost, and come to use for help.

In the end, though, it’s all gas, because employees at Home Depot aren’t there to help customers, they’re there to stock shelves. That’s why they’re so surly when they have to actually help a customer – it actually interferes with what their real job is, in ways that affect their performance reviews. It’s all part of the fetish American business people have for degrees.

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MariaRose October 8, 2018 at 7:00 pm

Any place that “pays” off loans for their employees is asking for something in return. I am guessing no one here read John Grisham’s book- The Firm- in which an unscrupulous firm “brought” loyalty to the performance of nefarious duties required by the company.
Despite the fact that a student loan can’t be removed from debt by a bankruptcy like other kinds of debt, one needs to choose wisely when going to college for a degree. Okay, you want to pursue areas in which you have interest in but people need to realize that college is basically a preparatory period to entering the job force. So unless you were born with that silver spoon guaranteed cushion, you need to learn skills during college that will help you get a good entry-level job for that skill. Also assuming that a college degree is a guarantee to a high paid position is false. You have to skills needed for the job market.
I don’t believe that nepotism works well in getting good candidates and iI wouldn’t want to work for a company that uses that to ignore promoting qualified employees to compensate

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Nacho October 9, 2018 at 6:12 am

They’re asking for work in return, just like any other payment your job gives you. That’s literally the whole point of a job: Trading work for payment.

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Dan October 8, 2018 at 8:23 pm

One man’s bug is another man’s feature. Early in my career when I’m saddled with student loan debt and needing to save for a house down payment, I’m also making very little money. When those two things are taken care of, realistically, I need less money. At the same time, as I start making more money, I “need” it less.

It can work out to an employer’s advantage to provide “limited time” assistance. Student loan repayment benefits are no different than “bonuses” or “lump sum” payments, and hardly any different than health insurance.

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Slippy October 12, 2018 at 3:03 am

Another case for paying off student loans is that some specialists have little value initially, but greatly increase in value with a few years experience; an example is someone just starting out in computer forensics. Offering student loan repayment allows you to hold on to a junior person for a while after they get some experience, otherwise they will likely jump ship for a large pay increase at the first opportunity.

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