he city is likely the first to offer the perk to its workers

We’re one step closer to student loan help becoming a standard part of an employer benefits package, like a 401(k) or health insurance.

The City of Memphis announced Thursday that it would contribute $50 a month toward any of its 6,000 employees’ student loans as long as they’ve been working for the city for at least a year. Student loan repayment assistance has become an increasingly popular perk among employers in the private sector over the past couple of years — so popular in fact that lawmakers are looking to make it tax-free for employers — but Memphis is likely the first city to offer the benefit to its workers.

The growing popularity of the benefit comes as coping with student loan debt is increasingly the norm in the U.S. More than 40 million Americans are contending with roughly $1.4 trillion in outstanding student loan debt. Though about 70% of bachelor’s degree recipients graduate with student loans, the issue is one that spans generations and degree levels as older Americans return to higher education to re-tool in a changing economy and parents and grandparents increasingly take on debt to help their relatives finance college.

Employers’ growing interest in helping workers pay back their student loans “reflects that many, if not most, workers entering the workforce have to contend with their student loans,” said Mark Huelsman, a senior policy analyst at Demos, a left-leaning think tank.

For these workers, help with their student loans can be even more appealing than health insurance or retirement savings programs. Nearly 30% of workers would prefer student loan repayment help to health benefits and more than a third would prefer the benefit to 401(k) contributions, according to a recent survey of workers over age 35 with student loans by ionTuition, a software company that helps borrowers manage their student loans.

Data on the popularity of student loan repayment assistance is part of what convinced Memphis officials to offer the perk to their workers, said Alex Smith, the city’s chief HR officer. “When we came into the city it was clear that we had a morale and recruiting and retention issue,” Smith said of when Memphis Mayor Jim Strickland’s administration began governing in 2016. “We were looking for ways that we could enhance our benefits offering so that we could be more competitive.”


The city is expecting about 14% of its workforce, or roughly 840 employees, to participate in the program. The workers, who range from police officers to IT staff, can use the benefit for as long as they’re employed by the city. The perk covers federal and private loans for both undergraduate and graduate school, but doesn’t include loans parents took on to pay for college for their children.

Smith said she’s hopeful the benefit will help sweeten the deal for workers considering a career in the public sector. Research indicates that the weight of student debt can push graduates toward lucrative, private sector jobs. Initiatives like the Public Service Loan Forgiveness program, which allows government and some nonprofit workers to have their federal loans forgiven after 10 years, aim to incentivize student loan borrowers to choose a career in public service. Some federal government agencies also help their workers with their student loans.

The perk could help people who are on the “borderline” of considering a career in public service know that “they can have a wonderful, valuable experience with us, just as with any other private sector employer,” Smith said.

City officials’ interest in offering the perk is a sign that the benefit may become more widespread among employers of all types instead of just sectors like Silicon Valley that are particularly hungry for top talent and traditionally compete around benefits, said Scott Thompson, the chief executive of Tuition.io, the platform Memphis is using to administer the benefit to its workers.

“It’s the beginning of the next wave of adoption of student loan repayment assistance,” Thompson said.

Thompson said he expects the number of employees on his platform to grow by 10 to 12 fold in the next year. But the perk still has a long way to go before becoming a workplace norm. Just 4% of employers offer it, according to a survey set to be released later this month by the Society for Human Resource Management. That figure has held relatively steady since the organization first began including on surveys in 2014.

One major factor preventing widespread adoption: any help an employer offers workers with their student loans is still considered taxable income. Some legislators in Congress are hoping to change that; they’ve proposed bills that would allow employers to contribute to workers’ student loan payments pre-tax up to a certain limit. “As more and more employers just say we have to do this, I do think there’s a little pressure there that ends up building [on lawmakers],” Thompson said.

But even if student loan repayment assistance were to become the standard among employers it would likely only make a small dent in the student loan problem. The borrowers who typically struggle the most with student loans are those with no degree and so they likely won’t end up with a job at the type of employer that would offer student loan help.

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