Student Debt Is So Massive Companies Are Using It To Lure New Workers
Companies competing with each other in a tight labor market are using student loan debt to recruit potential employees by offering to pay for education and repay student loans among other benefits.
Tight labor markets — when there are more jobs than workers — benefit workers because employers will make accommodations to recruit and retain employees. The accommodations can include flexibility in schedules, increased compensations, offering more benefits and spending more time and money on training, according to Marketplace.
Offering education compensations makes workers feel appreciated, according to Deniz Gevrek, associate economics professor at Texas A&M University, Corpus Christi, The Wall Street Journal reported Wednesday. Increasing salaries would also be more costly. (RELATED: As US Economy Improves, Elite MBA Schools See Drop In Applications)
Student loan debt is $1.5 trillion and increasing, according to the Federal Reserve, reported WSJ.
Abbot Laboratories, a health care company that hires over 1,000 college-educated people under 35 each year, contributes 5 percent of worker salaries into a 401(k) if employees pay at least 2 percent of their gross salaries to student loans. The plan was started in the summer, according to WSJ.
A 401(k) is a retirement plan sponsored by employers where employees delay receiving a certain amount of their salary. The delayed amount goes into the retirement plan and the deferred money is not taxable until distributed, according to the Internal Revenue Services (IRS).
Walmart began offering college education assistance for employees seeking associate and bachelor’s degrees on May 30 as long as workers studied business or supply change management, The Hill reported. Employees would need to attend the University of Florida, Brandman University or Bellevue University after working for the company for at least 90 days to reap the benefit. These schools offer online programs.
Employers offering college selection and referral programs has increased to 10 percent, which is more than double the percentage since 2014, according to WSJ.
The unemployment rate was slightly less than 4 percent in May, the lowest since 1969. The U.S. economy also added 201,000 nonfarm jobs — positions outside of farm work, nonprofits or unincorporated private household employment — in August as the unemployment rate remained stable at 3.9 percent, according to the Bureau of Labor Statistics.
The average amount of debt owed by public and private nonprofit university students was $28,650 in 2017, according to The Institute for College Access & Success. TICAS is a nonprofit education research and advocacy organization.
The Federal Reserve, Bureau of Labor Statistics and Gevrek did not immediately reply to The Daily Caller News Foundation’s requests for comment.
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