More grist for tuition inflation? Hot employer perk: student loan payoff

[GMTplus7]

From the NYT:
Medical, Dental, 401(k)? Now Add School Loan Aid to Job Benefits
http://mobile.nytimes.com/2016/03/26/your-money/medical-dental-401-k-now-add-school-loan-aid-to-job-benefits.html?_r=0&referer=

Every month, Amanda Danner and her husband make what feels like a mortgage payment. But they don’t yet own a home.Instead, they collectively pay nearly $2,000 simply to service their student debts. Their next-largest monthly expense is the rent on their apartment in Union City, N.J.“It’s a rough reality,” said Ms. Danner, a 26-year-old analyst for Fidelity, who graduated from Montclair State University with $85,000 in loans, more than double the national average. “We definitely want to buy a house in the near future, and we certainly want to have kids in the next couple of years,” she added. “But when you look at the initial monthly payments, it is staggering. It is hard to plan for the future.”

So she said she was thrilled to learn of a new perk that her employer made public last week: Fidelity will apply up to $2,000 annually to the principal of its employees’ student debts.

Great idea for an employment perk? Or adding fuel to the fire for out of control college pricing + borrowing?

Are non-borrowers misguidedly missing out on the gravy train?

[calmom]

It’s not new – it’s actually been a fairly common benefit in the nonprofit word. My daughter had that with her first job out of college. But obviously a $2000 annual employer benefit won’t go that far for a couple who has to pay that amount monthly.

[T26E4]

Some people are attracted by an onsite gym. Or telework. Offering to pay back student loans isn’t new. It’s all typical stuff to recruit and retain.

[Gator88NE]

Bah! on student loan repayments! Let me in on some of this sweet 401K action!!

Fidelity happens to have a 401(k) match that made this Gen X-er’s mouth water: Workers who contribute 7 percent of salary receive a match of 7 percent, for a total of 14 percent. And if the company performs well, it will sweeten that with profit-sharing of up to 10 percent more — for a total of, yes, 24 percent of salary.

From an employer standpoint, student loan repayments are a fairly low cost (compare to said 401K program or health benefits) retention program. As a retention program, it works better than the equivalent increase in salary. Come work for us and we’ll help with your student loans, for up to 5 years!

Edit: of course, if you then quit after the 5 years, it’s all good because we’ll just hire the next college grad struggling with a student loan, at a much lower salary than we’re currently paying you…and if that sweet 401K plan hasn’t vested yet when you quit, it’s double plus good!

[twoinanddone]

Isn’t this just a $2000 bonus? Do those who have no student debt get the money too? It’s just $2000in income, taxed and processed the same as other income.

[GMTplus7]

Do those who have no student debt get the money too?

They get zero.

[SouthFloridaMom9]

^^great points, plus $2K a year won’t make a huge dent for some people. And you have to gamble 4+ years in advance (sometimes) that you’ll get a job with that perk.

I’m not sure it’s enough money to add fuel to the fire . . .

[T26E4]

Like I said, it’s a recruitment tool. My agency tries to recruit for a particular position. Another agency recruits for the SAME position but includes a $12K load payoff amount, spread over 2 or 3 years. My agency doesn’t have that kinda money. Guess which agency gets to choose from a larger applicant pool.