How to recruit millennials? Pay their college loans
Along with competitive pay, employers offer a range of benefits in hopes of attracting the best and brightest workers. But few companies actually break out their checkbooks to help younger employees cope with what many experts say is a burgeoning financial crisis: soaring student debt.
Enter PwC. Starting next year, the business consulting and accounting firm will pay up to $1,200 a year, or a total of $10,000, in school loans for some of its employees. That could benefit many of the roughly 11,000 new college grads PwC recruits every year. Associates and senior associates, or those who have been at the firm between one and six years, are eligible for the "student loan paydown" program, amounting to nearly half of its workforce.
"We're recruiting millennials -- we want to recruit the best -- and they're coming to us with higher debt burdens than ever before," said Rob Gittings, vice chairman of PwC. He noted that the program could especially benefit minorities, who tend to exit college with more debt than white students. "We want to be seen as a firm that isn't afraid of taking on big issues."
PwC says it will be the first financial services firm to help employees repay their student loans. Only 3 percent of companies offer some form of company-sponsored student loan repayment, according to the Society for Human Resources Management.
Tuition reimbursement and other education assistance programs are far more common, with more than half of U.S. companies offering such benefits. But those payments tend to be modest, averaging just under $4,600, the group reported in a recent study.
Certainly, college grads can use whatever help they can get these days in dealing with their loans. After all, if higher education is recognized as a key pathway to success in the U.S., soaring student debt amounts to a major roadblock. Some 40 million Americans have a student loan, each owing an average of $29,000.
And even as families have paid down credit cards, mortgage and other kinds of debt during the economic recovery, total school loan balances continue to climb, topping $1.3 trillion.
PwC will gear the loan repayment to younger employees at the company, noting that like all companies it must balance the value of the benefits against its broader business needs. The firm also reasons that younger workers are most likely to need help shouldering the burden of student debt.
Well, yes and no. It's true that younger borrowers historically hold the most student debt, with 2015 college grads carrying an average of $35,000 in student loans.
But the fastest growth in student loans over the last decade has been among people over age 60, according to the Federal Reserve Bank of New York. In 2004, a quarter of student debt in the U.S. was owed by people age 40 and over.
By last year, however, that share had jumped to 35 percent, reflecting the large number of middle-aged and older workers who returned to school after unemployment soared during the Great Recession. Notably, in 2014 borrowers in their 30s owed the most in student loans and defaulted at the highest rate.
Gittings is cagey about saying whether PwC, one of largest management consulting firms in the world, will advise any of its corporate clients to follow its lead and launch their own student loan repayment programs. But he did note that PwC sees itself as a model in how to appeal to a younger workforce.
"It's a competitive market for talent," he said, "and we want to be the firm that's seen as the right place for talent to go."