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Companies offering help paying student loans

Posted at 6:16 PM, Feb 12, 2016
and last updated 2016-02-12 18:17:30-05

Things like health insurance, paid time off and a 401K are pretty standard when it comes to workplace benefits.

But the newest benefit some companies are offering is help in repaying student loan debt.

A whopping 71 percent of students are graduating with loans - and an average of $35,000 of debt.

Now, some employers are trying a new approach to help tackle the problem.

Zemina Zijadic moved to the United States with her family because her parents wanted her to get a college education.

"That was their American dream," she says.

But that dream came with a hefty price tag. It's been over six years since she graduated with a degree in international business and she still has about $50,000 in student loan debt.

So Zemina was thrilled to learn that her employer will soon pay $1,200 per year towards her loan debt, for up to six years.

It's part of a new addition to their overall benefits package.

"Millennials are really trapped under a mountain of debt. We see this as an opportunity to do something that mattered both to our people, as well as for society," says Michael Fenlon, a Global Talent Leader with PricewaterhouseCoopers.

Right now, a small number of companies - only about 3% according to the Society for Human Resource Management - offer student loan repayment assistance to employees. But, experts say that number is expected to take off.

"I think that this is really the beginning of a trend. Where we're going to see this benefit expand, initially, are in those companies that hire younger employees," says Bruce Elliott of the Society for Human Resource Management.

The idea is to help attract top talent in a competitive market and help relieve the burden on many younger workers.

"This is advantageous, both to the company and to the employee. To the extent that it keeps the employee motivated, it provides extra disposable income to the employee on a monthly basis, and for the employer it keeps the employee," says Elliott.

A sign, experts say, that the work perk is here to stay? Startups are aimed at administering the program for the employers.

"I expect, with companies like that entering the workspace, that we are going to see an expansion of this type of benefit," says Elliott.

That's something Fenlon hopes happens.

"The student loan pay down benefit is an investment in our people", he says. "It's an investment in their future. The sooner millennials are able to pay off their debt, the sooner they're able to state to reinvest, not only in their lives, but in our economy and society."

It's an investment Zemina is grateful for.

"It will make quite a difference," she says. "I mean, it will lower the amount of time that it will take me to pay back."

As part of the benefit, employers make payments through third party administrators that go directly to the loan providers. Employees don't have to do the work.

Elliott point out that a benefit like this makes workers more engaged and encourages loyalty and productivity.