Employers Are Tackling Gen Z's Student Loan Debt

Jeff Fromm - Contributor

Employee benefits have existed almost as long as companies have had employees. Caesar Augustus apparently gave his retiring soldiers pensions in 13 BCE to stave off rebellions. Caesar didn’t have to worry about Glassdoor reviews or rants on social media, but he was forward leaning.

In today’s Gen Z-driven workplace, curated choices and values matter. Compensation is king, but benefits can still be a crucial differentiator.

“In today’s world of work, competitive pay is table stakes — it’s the bare minimum,” says Johnny C. Taylor, Jr., the president and CEO of SHRM, the Society for Human Resource Management. “Employees expect more, with holistic benefits packages becoming an increasingly critical part of what sets organizations apart in the fight to attract and retain talent.”

Taylor noted: “According to SHRM’s 2024 Employee Benefits Survey, health care, leave, and retirement savings and planning rank the highest in employer importance regarding benefits. But right below those three is a second tier of high-priority benefits: flexible work, family care, and professional and career development, which points toward employers’ desire to meet employee wants and needs in a tight labor market where many workers continue to value flexibility and professional development.”

Your Benefits — And Employee Perception — Are Part Of Your Brand

Just as brands invest in consumer-facing brand-building, they realize they must also have strong employment/retention brands. Whether competing for the best talent or giving high-performers more reasons to build careers, they are starting to look more closely at how they are perceived as employers — especially as the workforce becomes more diverse.

Among the perks that employers believed would incentive team members to be loyal and stick around include:

• Vacation
• Health insurance
• Life insurance
• Parental leave policies
• Rewards for anniversaries
• Discounts on goods and services
• Matching grants for charitable donations
• Counseling resources
• Commuter benefits
• Travel perks
• Retirement plans
• And, most recently, remote work options and liberal PTO (personal time off)

Let’s not forget on-site activities, free snacks, a wide range of perks and celebrations, and off-site trips designed to boost company culture.

But What About Education?

Student loan debt has surpassed credit card debt and is now a whopping $1.75T. Who can even start thinking about what they’ll do when they’re 65 when those monthly payments loom?

Although all generations may be interested in “getting smarter” on their employer’s dime (or millions of dimes), younger team members are understandably more interested in digging themselves out of short-term debt than worrying about buying that home — like they might have been thirty years ago. Savvy companies must continue to research to understand what’s of the most significant value to the people they want to hire and retain.

How Do Companies Know What Their Employees Want?

Forrester Principal Analyst Betsy Summers says, “According to recent data from a joint survey to HR leaders from Forrester and HR Executive, an annual survey is the most commonly relied-on research method for understanding retention and engagement drivers.

Still, only 60% of organizations report doing surveys. More in-depth research, like journey mapping, monthly pulse surveys, and sentiment analysis, sits at 25% and 16%, respectively. Though every company might say they want to understand what attracts and retains their workforce, only those who invest in the right listening strategies and then act on the results are serious about it.”

Strong understanding of workforce needs led to introducing student loan-related benefits at the University of Miami, UHealth and the Miller School of Medicine. “Our approach is driven by a deep commitment to listening to our faculty and staff to offer benefits that can make a difference in their lives”, says Alison Mincey, their SVP and CHRO. “Recognizing the impact of student loan debt on our workforce, we established a student loan repayment assistance program that provides monthly contributions to repay student loans, resources to achieve loan forgiveness, and loan coaches for additional support. Thousands are already benefiting from this program.”

In addition, AI and other workplace transformations mean that employees need to continuously “upskill” or “reskill” to progress at their current company or move on to something bigger and better, increasing the cost of education.

“Student loan debt-related benefits have been solving critical staffing and turnover issues for employers in healthcare and education for a long time,” says Scott Thompson, CEO of Tuition.io. Scott continued, “We’re now seeing this strategy emerge in other industries looking to appeal to the next generation of workers, as Healthcare and 401(k) benefits just aren’t as relevant for younger, healthier employees with high living expenses.” While most employers are still on the sidelines some forward-looking and responsive companies stand out as setting the next standard of benefits for the future workforce.

Verizon is one of those companies. Earlier this year, Verizon implemented its Secure Your Future program. Starting on day one of employment, employees can get up to a 6% company matching 401(k) contribution by making qualified student loan payments. “When the Secure 2.0 Act was passed, we saw it as an opportunity to offer another way for our employees to earn a matching contribution to our retirement plan,” stated Kevin Cammarata, Vice President of Benefits at Verizon. He continued, “We aimed to bridge the gap between employees’ immediate financial needs and long-term goals, which can be a differentiator with those that are wrestling with student loan debt.” Verizon reports over 1,800 employees have enrolled in the benefit since the program launched.

Technology also now plays a more significant role in benefits selection and administration for digitally savvy employers and employees. Self-service benefits management has become necessary for forward thinking companies, especially those trying to attract employees of all ages and stages.

Thompson summarized, “Gen Z has been hit hardest by student loan debt, and employers must find solutions that ease the pain. By supporting individual financial wellness and career growth, companies can both stand out to this population and solve the damaging impact of turnover on organizational performance.”

About the author: Jeff Fromm
Jeff has contributed at Forbes since 2014.
His sixth book "As Loyal As A Dog" will be published in 2025.
His first books "Marketing to Millennials" (2013) and "Marketing to Gen Z" (2015) were informed by research he led with The Boston Consulting Group.
He can be reached at jfrommkc@gmail.com. On LinkedIn - linkedin.com/in/jefffromm

Photo courtesy Pexels.