Fidelity recently announced that over 5,000 employees were now eligible for a new employee benefit that would provide up to $2,000 per year towards student debt, with the total benefit capping out at $10,000.
The Boston Globe quoted one executive who stated that, “ We felt that providing a benefit like student loan repayment assistance helps us to address a very real financial concern that is impacting our employees directly.”
Even if you are not one of the 5,000 Fidelity employees directly impacted by this announcement, the news is still pretty good. Many major media outlets picked up the story, and the implications from this trend growing are pretty huge.
The trend continues…
Though student loan assistance is far from a common benefit, it is steadily popping up in a number of different sectors. Not only are large companies like Fidelity offering loan assistance, but even the federal government offer repayment assistance to certain employees.
As more companies offer repayment assistance, the trend will only continue to pick up. When employers are competing for the brightest and most talented, this is one perk that will get some attention.
Understanding of debt burden
These repayment assistance programs would not exist if companies didn’t think it would help out there employees. As word of the benefit spreads, so does the understanding of the difficulties of paying off student debt.
A generation ago, student debt didn’t have nearly the financial impact that it does today. The more people realize that student loans are a major burden, the more programs, both public and private, will be put into place to help borrowers.
Many benefits that come with employment also have tax advantages. For example, if your employer has a 401(k) plan, you can contribute to your retirement using pre-tax dollars. This can be a huge boost to your future and lower your bill each April.
Similarly, many healthcare plans offered by employers have tax advantages. The hope for student loan borrowers is that the trend of tax savings for employment benefits continues on to student debt repayment assistance.
Creating such a tax benefit would arguably create a situation in which everyone wins. Borrowers obviously come out ahead because more employers could offer the benefit. Employers that currently provide the benefit would save money and other employers could start offering the benefit because of the lower cost.
Even the government would realize some benefit by creating a tax advantaged student loan program. As the largest lender of student loan debt, to the tune of over a trillion dollars, programs that help borrowers pay back the debt would mean more of that trillion dollars is paid back in a timely manner.
The Bottom Line
One company helping out its employees with their student debt is hardly a game changer. However, it is a positive step forward and hopefully an indication of better things to come.