Q: I work in HR, and recently I’ve been reading about an emerging trend in company benefits—student loan payment matching. I understand that millennials and Gen Z are entering the workforce saddled with debt, so it could be a huge way to attract young talent. Should I expect this—and other alternative benefits—to become mainstream? Are health insurance and 401k matching no longer enough?
A: No, health insurance and 401k matching are not enough anymore. Millennials are in a significantly different situation than previous generations entering the workforce. The costs of living, housing, and higher education are astronomical and the amount of student debt this generation is graduating with is much higher than any generation before them. Employers who are eager to hire talented younger workers need to pay more competitive bases and recognize what other types of monetary support these new employees can benefit from.
Many recent surveys have revealed that young people often consider paying off their student loans to be the biggest financial challenge they’re facing, so unless the economy undergoes a significant change, “alternative benefits” like student loan payment matching will absolutely become mainstream in the coming years. We’ve all heard that millennials want regular feedback and recognition in the workplace, but they don’t want that at the expense of not being able to meet the financial obligations they have. Great employers want to know what their employees want and how to attract and retain the talent they need. As a result, they are starting to expand their benefit offerings to meet their employees where they feel it the most. That might be paying money toward student loans or offering interest-free home down payment assistance programs, tax-free HSA funds, subsidized food in the office, or subsidized shuttles to transport employees to the office. All of these things will help you get and keep the talent that you want.
Another great benefit to consider offering your millennial workforce is access to a financial planner. Your retirement services provider may offer these services, and having them customize sessions for millennials is easily provided. Many large companies provide financial planning support to their top executives, when, in fact, their millennials probably need the support more than anyone. This generation receives a lot of mixed messages about what to prioritize financially, and they don’t always have the flexibility to do it all. Should you contribute extra to your 401k or extra toward your student loans? Will that bonus be better used if put toward student loans or a down payment on a house or retirement? These options can quickly get confusing—especially when they are all life-changing decisions. If you are interested in creating more millennial-friendly benefits offerings, access to financial planning support could be a great first step.
You should absolutely expect standard benefits to shift with the generations. What was right for Baby Boomers isn’t necessarily going to be what’s right for millennials. Your organization’s ability to attract and retain the best new talent will depend largely on whether the compensation and benefits meet their needs.