With college debt at an all-time high and expected to increase, now’s the time to think about adding loan reduction as a benefit.
Recruiting great talent takes skill, a little bit of luck, and some great benefits. The other day I was trying to figure out ways our clients could separate themselves from the competition when it comes to recruiting the best talent.
Of course, everyone wants to just throw money at the problem without thinking about the factors that drive a candidate to decide to go with one firm or another. It's probably a bit more involved than that. Ask any recruiter and they will tell you that the deal isn't done until the candidate signs the offer letter, and even then things can fall by the wayside through no fault of your own.
I was on a plane recently and stumbled across an article in The Wall Street Journal that addressed student relief as a corporate perk.
What a novel idea!
This issue got me thinking about the challenges facing young engineers and architects who are looking to work for a great company. It's hard enough beating the pavement and finding a job, and when you add to it the stress of dealing with student loan debt ($35,000 average student loan debt at graduation in 2015), the decision-making process for these newly minted engineers and architects becomes a bit tricky.
Here are some ideas to consider as you work to fine tune your pay and benefits package to attract this millennial generation of talent.
Imagine being able to offer new employees healthcare, a 401(k) program, and a student loan repayment option or bonus. That's a big deal for a young employee dealing with the kind of debt that this millennial generation is facing.
National student-loan debt is at an all-time high – and is expected to double in 10 years. Projections by the Congressional Budget Office put the total outstanding federal student-loan debt at $2.4 trillion by 2025.
According to a 2015 survey by Iontuition.com (a website that helps manage student-loan payments), more than half of current students and recent college graduates with student loans said they would rather receive an offer of loan help than a health plan. Nearly half of those surveyed also stated that they would rather have student-loan help than a 401(k).
These survey results are very telling. In the immortal words of the great R&B group, the O’Jays: “Give the people what they want."
This new opportunity has even spawned start-up companies that have developed student-loan repayment programs. Companies like Boston-based Gradifi Inc., and Student Loan Genius, located in Austin, have developed platforms that can help firms implement these new benefits.
PricewaterhouseCoopers has taken this idea and leveraged it to their advantage on college campuses throughout the nation as they work to attract new hires. PwC worked directly with Gradifi to get the program up and running and make student loan repayment a reality for new employees joining the firm.
Now I should say that, according to an SHRM survey, only 3 percent of companies in 2015 were currently offering to help their employees pay off their student loans. Based on anecdotal evidence, it appears the number is quickly rising.
The biggest challenge to this option is the tax implication. Money to help pay student loans is taxable income. There is a bill in Congress right now, the Employer Participation in Student Loan Assistance Act, introduced by Rep. Rodney Davis (R-Ill.) on the House side, and on the Senate side by Sen. Mark Warner (D-Va.). The House bill seeks to extend the tax exclusion that currently applies to employer-provided tuition assistance – up to $5,250 per year – to include employer contributions to employees' student loans. The bill would also provide incentives for employers to subsidize student loan repayments.
Whether this bill passes or not, there are some creative ways that a company can implement this benefit and create a strong recruitment and retention tool for new and current employees. This is one of those benefits that has yet to take hold in the design industry. I suspect that those early adopters who figure out a way to make this work will have a tremendous advantage over peer firms who are not willing to be creative when it comes to developing new ideas and programs to attract and retain the best talent available.
I honestly hope that someone will read this article and sit down with their CFO, controller, and head of HR, and figure something out. Please, do share your efforts with me and let me know how things go. As always, I'm available to discuss this topic or anything else related to recruitment, retention, and leadership.
Randy Wilburn is Zweig Group’s director of executive search. Contact him at rwilburn@zweiggroup.com.
This article is from issue 1151 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.