Millennials are on pace to make up 75 percent of the labor force by 2025, and as employers search for new benefits that will appeal directly to the largest working generation, more and more of them are turning to student loan repayment plans (SLRPs).
According to the Society for Human Resources, these SLRPs allow employers to make monthly contributions directly to an employee's student loan servicer, in some cases as much as $2,000 annually for a period of five years.
This innovative offering will get an even more creative twist next year, when the insurance company Unum Group begins helping pay off the student loans of employees who voluntarily give up paid vacation time.
Employees can trade five days for an average of $1,200 in student loan payments
Beginning in 2020, Unum employees can give up five paid vacation days in exchange for a student loan payment that is equivalent to the total hourly wages. The exact amount will of course vary depending on the worker's salary, but the company anticipates an average of about $1,200 a year, Bloomberg reported.
Unum estimates that roughly 30 percent of its 8,500 workers will take advantage of the benefit and trade five days off for over $1,000 in debt relief. According to the company's internal research, its employees carry $32,000 in debt requiring monthly payments of $350. The program will also allow parents who share responsibility for a child's loan to lighten their debt burden.
"We thought it was a more creative method," Carl Gagnon, who runs the insurer's financial well-being programs, told Bloomberg.
Bloomberg also interviewed a 30-year-old Unum employee named Jimmy Valentine, who said he plans to cash in the full five vacation days each year until he has paid off his $22,000 student loan debt. He says doing so should net him an extra $1,120 a year towards his debt, and like a little more than half of all Americans, he already fails to use all of his vacation days.
"I should take more days off," Valentine said. "But I continue to work to make sure I keep up with everything."
Unum estimates that 30 percent of its employees will sacrifice time off if it means more student debt relief. Workers may appreciate tough choices over no choices
Since the new benefit will not be implemented until next year, it remains to be seen whether or not it will prove to be an effective tool for recruitment and retention.
It is possible that feeling as if they must choose between paying off debts and enjoying any rest and relaxation may have a demoralizing effect on employees. Earlier this year, a Buzzfeed article entitled "How Millennials Became the Burnout Generation" achieved viral success by diagnosing the largest generation in the U.S. workforce with exhaustion caused by a combination of higher student debt, lower job stability and increased pressure to work long hours for low wages, particularly in the early stages of a career. Trading some student debt relief for more time stuck in the office could simply reduce one stressor while increasing another, doing little to change the overall outcome when it comes to employee satisfaction.
Unum, for its part, insists it is not forcing its employees into a Sophie's Choice between student loan payments and taking a little time off. The company's employees receive at least 28 days of paid time off each year, which is substantially more than the 15 paid vacation days that the average U.S. worker enjoys, according to the Bureau of Labor Statistics.
"Giving up five [paid vacation days], that gives people ample time," Gagnon told Bloomberg. "It offers choice."
The concept of choice may be the key to this new benefit's success. One of the major employee benefits trends in 2019 is customization, in the form of more creative benefits packages that allow an employee to tailor a plan to his or her unique needs. At a time when unemployment is low, companies can distinguish themselves from the competition by offering more and more options when it comes to how and when workers get to utilize their benefits.
To inspire your workforce with the latest in employee benefits, and to simplify the process as much as possible, contact the experts at Triton Benefits and HR Solutions today.