The quest to attract, hire and retain skillful employees is real. The need for resourceful employees is rocketing high and employers are looking forward to offering flexible work hours, bonuses, quick appraisals, and a whole range of perks even for basic jobs. However, one thing that new generation employees need is student loan repayment, which isn’t being embraced well in the industry.
According to recent statistics, the size of student loan has increased approximately 47% in the last financial year. These figures are despite the fact that the number of students availing education loan has decreased. Since education is becoming costlier by the day, the need for student loan repayment has enhanced.
Impact of Student Loans on Employees
Many young employees believe that repayment of student loan is the major stress of their career after completion of graduation. To add to this misery, student loans in India are generally acquired at a high interest rate. After employment, it becomes necessary for these employees to start repaying the loan which can take up a major portion of their salary. Additionally, this loan can take years to clear.
Due to these reasons, the stress related to education loan is high, which decreases employee productivity in the workplace. When employers offer student loan assistance to these employees in any form, it is well received. Naturally, it is more about taking a step forward towards retaining your employees and their well-being.
There are various ways, in which employers can assist employees with loan repayment. Check out two of the major trends currently being followed in the industry.
1. Student Loan Repayment Plans
Many large organizations have come up with student loan repayment plans. The logic behind is simple – while the employees themselves keep paying the loan amount, the company directly deposits a certain sum to the loan provider. This reduces the principal amount on monthly basis and enables employees to repay their loan quickly.
Needless to say, this option attracts a lot of employees as their total student loan will get repaid rapidly and the overall burden will be reduced. However, student loan repayment plans are no doubt expensive for the employer. On an average, students acquire loan amount of INR 6 to 10 Lakhs for studies. Repaying even one-fourth of this loan is a major amount when added together for multiple employees.
2. Alternative Solution to Student Loan Repayment Plan
Since student loan repayment plans are not an option for every organization, there is an alternative solution – repayment knowledge. The adoption of the repayment plan is limited and can be only adopted by large organizations. No matter how much benefits you can gain from these plans, student loan repayment is still a highly expensive option.
An alternative approach is to offer repayment knowledge and guidance. Most employees share that they didn’t know 5 years back how they can manage money and pay their loans in a better way. If this assistance is provided by the organization, many employees are likely to sign up. This will reduce their burden of loan repayment and the organization wouldn’t have to spend thousands of dollars in loan repayment of employees.
Loan Repayment Assistance: An Easy Choice
Whether you choose to repay some amount of education loan, provide guidance on loan repayment, or offer low-interest company loans to the employees, all this adds on towards employee enhancement. With decreased workplace stress, the productivity will improve and you will be able to retain more employees.