Five student debt pitfalls
Paid time off, health care, a 401(k) and … student loan repayment? Be sure to ask about this benefit the next time you look for a new job.
A small but growing number of private employers are offering their workers extra cash to go toward paying down their student debt.
Now local governments are starting to join the trend. Starting July 1, full-time employees of the city of Memphis will be eligible to receive $50 a month for their loans.
"We are proud to be the first municipality in the country to offer this kind of student debt assistance to our workforce," said Alex Smith, Chief HR Officer for Memphis.
About 840 people, or 14% of the city’s workforce, are expected to benefit from the program, Smith said. That includes workers from across city divisions, including the police and fire departments, as well as the government’s legal and human resources staff.
The new perk was approved by the city council this week.
"We’re looking to recruit younger workers," Smith said.
But there’s no age limitation for the repayment benefit. All full-time workers are eligible regardless of when they borrowed the money, or whether it’s a federal or private student loan.
The average borrower in the Memphis metropolitan area has $31,000 in student loans, according to the St. Louis Federal Reserve Bank. The total amount of student debt there grew by almost 5% during 2015, faster than it did across the country.
Nationwide, there is $1.3 trillion of outstanding student loan debt, held by about 42 million Americans.
Just 4% of all companies give workers money they can use to pay down their student loans, according to the Society for Human Resource Management.
In March, legislation with bipartisan support was introduced in Congress that would encourage more companies to offer the benefit by making it tax deductible.
But the idea is gaining traction. PwC, Aetna, Fidelity, Prudential and Staples are some of the biggest names to launch a student loan repayment program for their employees last year.
The Memphis program "should be a clarion call for other municipalities to follow suit," said Scott Thompson, CEO of Tuition.io, which will help administer the benefit to workers.
"We know that people come to the public sector because they really want to make a difference. We want to make it clear to them that it’s a long-term career option," Smith said.