The discussion of student loan debt in the US is everywhere. The media regularly explores student debt as a problem not only for students and borrowers, but for the country’s economy. Reports show student loan debt is one of the largest sources of debt for Americans, second only to mortgage debt, and it increased by $14 billion from 2022 to 2023.
Educational costs can be particularly high for physicians and other healthcare professionals. According to the Association of American Medical Colleges (AAMC), the median total education debt for medical school graduates is $200,000.
As graduates look for ways to reduce student debt, employers are becoming aware that adding student loan benefits to their employee benefits package is a great way to attract – and retain – physicians and other healthcare workers to their hospitals and clinics.
Great benefits give employers a competitive edge
Salary is just one of the things healthcare professionals value when deciding on employment. In addition to competitive salaries, great benefits, such as health, dental, and retirement options, are vital to attracting and retaining talent. And according to the International Foundation of Employee Benefit Plans, employer-paid student loan benefits can make all the difference in recruiting and retaining a valuable workforce. Even as far back as 2017, a survey from American Student Assistance found that 59% of young workers said paying off their student loans is a higher priority than saving for retirement with a 401(k). And those numbers have only grown:
Assistance with student loans can provide an immediate and measurable financial benefit to prospective employees versus long-term goals like a 401(k). And offerings like student loan counseling or loan-management programs can help borrowers get clarity on their financial future.
Employer student loan benefits: What are they?
Employer benefits that focus on student loan debt relief may include any of the following:
Employer student loan repayment options
Through IRS code 127a, employers are allowed to pay $5,250 annually toward the student loan debt of their employees as an employment benefit, and currently, both employers and employees receive a tax benefit for the amount.
Banking options connected to student loan benefits
Employers can partner with financial institutions to offer unique benefits to their employees. For instance, Laurel Road partners directly with healthcare employers to provide exclusive student loan options, including student loan forgiveness counseling, refinancing rate discounts, and educational tools for financial wellness. Employers can also design an optional paid-contribution plan to help pay down employees’ loans faster.
Repayment matching programs
Employers can also connect employees to state-sponsored programs or offer repayment matching in other ways. Another new regulation allows companies to consider matching employee student loan payments as contributions to their retirement accounts (i.e. 401(k) funds).
With this program, if employers provide traditional matching retirement plan contributions, but employees are prioritizing paying down their student loan, then employers can match qualifying monthly student loan payments with contributions to their employees’ 401(k) accounts, learn more here. This benefit can help employees from having to choose between paying down their debt or saving for retirement.
Access to student loan counselors
To help employees save time and stay up-to-date on the federal student loan landscape, healthcare employers can partner with Laurel Road to offer staff members one-on-one consultations with student loan experts who can help them understand their repayment and forgiveness options. During a consultation, employees get an analysis and a personalized plan for their student loans. For employees pursuing forgiveness, they can access ongoing guidance by opting for a student loan forgiveness counseling membership.
Healthcare employer student loan repayment
Physicians and other HCPs searching for employment are looking for employer-based student loan options as part of their overall benefits package for several reasons:
Employer student loan repayment and corporate benefits
Employer student loan benefits are a win-win for employers and medical professionals. Hospitals and other medical employers can use these unique benefits to gain a competitive advantage in recruiting new talent and increase employee satisfaction. They also help to champion the importance of healthcare professionals in the industry by supporting their financial wellbeing. Employers or HR associates considering a partnership with Laurel Road, can look to our experts to offer employees everything they need to navigate the student loan landscape.
