Payback's a bitch
Alyssa Place: (00:00)
Welcome to Perk Up!, a podcast about workplace culture and benefits brought to you from the team at Employee Benefit News. I'm Alyssa Place, executive editor at EBN. And over the past few weeks, my colleagues and I have been sharing the stories of businesses that have implemented forward-thinking, covetable workplace policies and benefits, keeping their employees happy and their company's bottom line thriving. Today's our final episode, and we're handing it over to editor in chief, Stephanie Schomer. She's talking to employers about tackling student loans, and why this is the next must-have benefit for new employees.
Stephanie Schomer: (00:42)
Hey everyone. And welcome to today's episode of Perk Up! I'm Stephanie Schomer, editor-in-chief of Employee Benefit News. And today we're going to talk about something that a lot of us have, and that a lot of us hate: student loans.
Stephanie Schomer: (00:58)
According to the Education Data Initiative, near 45 million Americans have outstanding student loans and just over 42 million carry a balance on a federal loan. The same organization estimates that in 2022, the average monthly student loan payment is about $460. And for the average borrower, it'll take 20 years to repay student loan debt. Painfully, 67% of total cost repayment tends to be generated interest, the initiative reports. Even for workers who have reliable jobs and income, that's a significant financial lift that can really alter the effectiveness of your paycheck, and for plenty of graduates that are entering the workforce for the first time and have a limited amount of financial literacy, finding a balance in budget can be an uphill battle. Frank Cook is the product owner of strategic partner development at Esker, an international software company based out of France with American headquarters in Madison, Wisconsin, where Cook works alongside about 200 other colleagues. Cook, who's 35, finished his graduate degree back in 2009. And like so many others, he it on student loans to complete his education. But now, Cook has a secret weapon: His employer offers student loan repayment as a benefit. It's something that makes those monthly payments a bit easier to bear, and has contributed to Cook's long tenure at the company — five years and counting. It's a benefit hee says that more employers should embrace, especially as a fight to recruit young, fresh talent is tougher than ever.
Frank Cook: (02:27)
Stephanie Schomer: (03:24)
Beginning in 2019, Esker partnered with a startup Goodly, which provides student loan assistance. As a benefit for employees who've worked at Esker up to two years, the company will pay $100 per month toward their loans; for two to three years of service, $125 is a month. And for four to five years of service, $150 a month. For Cook, getting set up with a benefit — the platform of which integrates with a company's payroll — was a breeze.
Frank Cook: (03:49)
Stephanie Schomer: (04:20)
Anne Donarski: (04:41)
We want our employees to be healthy, happy employees. And we are in it for the long term. We don't, we don't wanna burn through our employees. We want them with us for the, the 12 years like me or 15 or longer. So we wanna keep them happy and keep them here. Once you start looking at what your payroll costs are and how big those are, these numbers are really pretty small compared to of that. And if it keeps your employees around, so you don't have that turnover factor and in the, the knowledge gap, when you lose people, it's definitely worth it.
Stephanie Schomer: (05:10)
Frank Cook: (06:04)
Stephanie Schomer: (07:19)
Anne Donarski: (07:40)
We are growing quite significantly as well. So we're adding more head count than we have in the past, but it's definitely with the pandemic. There's just a shortage of labor right now. And I know it's across the board. Everyone is feeling it. And I even feel it in my role. We're trying to hire an accountant and we've never had such low responses to a position posting. And we're even trying different ways to recruit people as well. We're trying virtual career fairs and campus recruiting and the traditional mining in LinkedIn. So we're trying all kinds of different things to get candidates in the door.
Stephanie Schomer: (08:14)
As the cost of education continues to rise and previous hopes of the Biden administration canceling any amount of student debt diminish this type of benefit may increasingly help employers appeal to new talent and build lasting loyalty too. It's all part of what Gregory Poulin co-founder and CEO of Goodly had envisioned when he first launched the startup back in 2018. But we'll get into that momentarily, after a short break.
Welcome back to Perk Up!, where we're talking about how student loan repayment benefit have become an increasingly attractive tool to help employers retain existing talent and attract new workers too. This was all part of Gregory Poulin original vision. When he launched goodly in 2018, though, his primary motivator was a bit simpler. He knew firsthand how debilitating student loan debt can be.
Gregory Poulin: (09:00)
When I was in school, my father passed away unexpectedly after having a heart attack. So to pay for school at Dartmouth, I had to borrow $80,000 in student loans. And after graduation, I moved to Silicon valley to work at a startup I and my monthly student loan payment is now over $900 a month. So it's very challenging to live in a city like San Francisco when you're paying down such huge student loan debt, but also very challenging to do things like, say for retirement, or see to achieve some of your other financial goals with such large student loan payments.
Stephanie Schomer: (09:31)
Gregory Poulin: (09:54)
有一些公司正在寻找提供学生贷款福利的解决方案。嗯，甚至有一些公司正在处理这些类型的支付和管理学生贷款福利，通过手动削减支票给他们的每个员工，学生贷款服务人员，并邮寄出去。当然，这是一个劳动密集型的过程，消耗了他们大量的时间。因此，对于这类客户，我们能够将他们转移到我们的平台上，利用我们的软件自动化地提供学生贷款福利。但在美国，还有很大一部分公司仍然不知道这些类型的福利的存在。有一件事可以帮助他们的员工在学生贷款债务中挣扎。And so one thing that we've done a lot of over the last few years is really create awareness for employers, by putting out different thought leadership and best practices for how companies can administer and implement these types of solutions.
Stephanie Schomer: (10:44)
Gregory Poulin: (10:54)
When we started the company in 2018, it would be very, very rare for an employer to reach out and say, you know, we have an employee who came to us asking about these types of solutions. Now we want to, to implement a solution. Now we've seen really that that really kind of take off in terms of the number of companies and the number of employers that are reaching out to our team here at Goodly and saying, you know, we lost a job candidate to one of our competitors because they're offering student loan benefit. Or during the interview process, we were being asked constantly, what does this organization provide in terms of being able to help employees who are carrying such high levels of student loan debt? You know, we need to be able to offer a solution. If we wanna remain competitive from a recruiting and retention perspective, many employers also credit student loan benefits with contributing to the diversification of their workforce and helping them to build a really diverse talent pipeline.
Gregory Poulin: (11:41)
The average black graduate holds about $25,000 more in student loan debt than white college graduates. Women hold about two thirds of all student loan debt, collectively holding about a trillion dollars in student loans and for Latino and Latinx borrowers, they typically have about 31% higher student loan debt. And the result is that underrepresented employee populations are starting their careers with larger debt to repay, which is delaying their ability to accumulate wealth compared to their majority group peers. And for companies that are realizing that their current benefits offerings are out of touch with a growing millennial and Gen Z workforce, they're increasingly turning to solutions like goodly and student loan repayment as an alternative solution to some of those benefits as well,
Stephanie Schomer: (12:24)
Poulin says, it takes just 10 minutes to get a company up and running on good lease platform. Employees are invited to join and all loan debt is verified on behalf of their employer. From there, the system manages all payments, which in the wake of COVID 19 and the cares act are tax free. Plus goodly processes, these payments in a way that can bring even more value to the benefit pull and explains.
Gregory Poulin: (12:45)
我们将这笔付款作为二次付款处理，这意味着我们将直接用于支付学生贷款的本金。So for the average employee, by taking this approach, we can actually help them reduce their loan term by about 30% for a contribution of just a hundred dollars from the employer.
Stephanie Schomer: (13:03)
Anne Donarski: (13:32)
We are trying to encourage employees that this money should not replace what they're paying toward their student loan debt, but should be in addition to it so that we can eliminate their debt faster. And everyone that I have talked to about this benefit is, is just over the moon, ecstatic, that this is a benefit that we offer
Stephanie Schomer: (13:52)
Loans aside, the trickle down impact of this benefit can help reshape an employee's financial future. The pressure of student loan debt and that monthly due date can lead employees to focus on their bills at the expense of their retirement plan.
Anne Donarski: (14:04)
I'm a big fan of the 401(k). And we were shocked at how many people weren't fully capitalizing on the match that Esker offers. And part of our answer to that was, well, they have money going to other places, most likely student loan debt. So maybe if we can help them with their student loan debt, that they can start putting more money toward their 401(k) and saving for their future. Instead of paying off the debt from their past, and the student loan is a debt. It's a bill, you have to pay it. Whereas a 401(k), it's a debt to pay yourself, but you don't look at it that way. So, so many people don't consider paying themselves first.
Stephanie Schomer: (14:45)
Anne Donarksi: (14:58)
Stephanie Schomer: (15:08)
And for Cook, well, the benefit is helping him build a brighter future — and bring a few more small pleasures to his day to day life.
Frank Cook: (15:15)
It's nice to know that they will be going away sooner and that it will be saving me more than just a contribution amount every month, but it will be saving me the additional interest and, and things like that because it's lowering the principle. So I think that's a definite benefit. It's the little things that it affords in life that you don't really realize, you know, it's the, it's the dinner out, it's the movies, it's the, you know, weekend road trip that, yeah, it's gonna be a tank of gas, which, you know, by today's prices could be 100 bucks for some people or 75 bucks, but you know, it, it's the additional kind of niceties out every month that I can attribute to that, which, which makes it a little bit, you know, it just makes the sunshine a little bit brighter,
Stephanie Schomer: (16:02)
A benefit that supports employee wellness in the present and future feels like a no brainer. And yet, as of 2020, just 8% of employers were offering a similar program, according to the Society for Human Resource Management. But as the war for talent persists, it's likely that this benefit will only gain speed and ideally make life a little easier for workers and their employers alike. I'm Stephanie Schomer with Employee Benefit News. Thanks for listening today.
Alyssa Place: (16:30)
And that's our show today. Thanks for joining us for the first season of Perk Up! and be sure to revisit all six episodes wherever you get your podcasts. This episode was produced by Employee Benefit News with audio production by Kellie Malone. Special thanks this week to Frank Cook and Anne Donarski from Esker and Greg Poulin from Goodly. Rate us and review us and check out more from the team at benefitnews.com.