Alaska’s higher education loan corporation is making a pitch to employers in the state to offer help with student loans as way to attract and retain talent.
Citing national data, employers would be able to hire new staff 13 percent faster and retain them 36 percent longer, which reduces turnover, according to information being presented to employers’ groups by the Alaska Commission on Post-Secondary Education.
What may be more important to employers is that 86 percent of millennialsm, or people born between 1981 and 1996 (ages 23 to 38 in 2019) say they will commit to work for five years.
Although they are in adulthood, the younger Millennials in their ‘20s are a key target for recruiters, Half of the Millennial population have student loans and 57 percent say repayments are a major financial problem, according to the national data compiled by the state commission.
At this point there’s no formal proposal being made by the commission – the idea is still in the talking stage – but its promoters look to the success of another state program that assists health care providers recruit for hard-to-fill jobs by offering education loan and other incentives.
That program is being administered by the Alaska Department of Health and Social Services. A crucial difference is that in the health care sector there are special federal tax advantages for incentives that are not available, at least yet, for employers outside health care.
For mainstream Alaska employers the post-secondary education commission is working to educate employers on the idea and gather information to develop a path forward, according to Kerry Thomas, director of program operations with ACPE and who is coordinating the effort.
“ACPE has had discussions with a number of employers and is using the feedback. We partnered with the Alaska Society of Human Resource Management to jointly administer a survey of its 800-plus members, a population of Human Resource professionals across a variety of industries in the state,” Thomas said in an email.
Results of the survey were that 53 percent of the positions within the member organizations require post-secondary education, either traditional college degrees or other post-secondary training. Sixteen percent of the respondents have considered implementing a student loan repayment program, Thomas said.
“We view this as an area where we can assist by providing education and resources. A majority of respondents indicated they would be receptive to ACPE providing assistance in student loan repayment efforts,” Thomas said.
On the national level, a survey of 2,763 employers by the Society for Human Resource Management shows that 8 percent of respondents currently offer assistance with loan debt and the number is climbing, up from 4 percent in 2018 and 3 percent in 2017. This signals growing concern for the problem of heavy student loan debt.
What form financial assistance in Alaska may take is up for discussion. The treatment of student loan assistance as federal taxable income for the recipient is a key problem.
The health care sector now has special tax treatment and there is one proposal pending in Congress for other employers, the Employer Participation in Student Loan Assistance Act.
The Senate version of the bill, S.460, is sponsored by Sen. John Warner, a Virginia Democrat, and Sen. John Thune, a Republican of South Dakota. The House version, H.R. 1043, is sponsored by Rep. Scott Peters, R-Calif.
Two states, Connecticut and North Dakota, have passed new state laws to encourage employer assistance, Thomas said. Connecticut’s program involves a state tax credit of up to $2,625 per employee for companies making loan payments on behalf of employees. North Dakota provides matching grants to employers for financial assistance on student loans in fields of high demand in the state, he said.
A number of states are also considering special state funds potentially funded by donations from industry in return for tax credits, to be used for high-need jobs in the private sector as well as hard-to-fill jobs in state government.
Nationally, there is growing concern on the effects of ballooning student loan debt on employees’ financial well-being, with particularly concern for student loan payments crowding out contributions to retirement funds.
A related worry is that student loan debt impedes the ability of Millennials to purchase a home and begin building financial equity.
In recent months, major firms like Abbott Laboratories, Travelers Cos. and Raytheon Co. have launched programs to assist employees handle student loan debt, and other companies are considering a variety of plans, according to an Oct. 11 Wall Street Journal article (“Firms Offer Student-Loan Payment Perk”).
Americans now have $1.5 trillion in student loan debt, up from $346 billion at the end of 2004, the Wall Street Journal reported.