Younger Workers Put Student Loan Aid Near Top of Desired Benefits
Help with loan repayment is valued more than 401(k) contributions
Millennial workers and their younger colleagues just entering the workforce are more likely than older workers to choose—and stay with—employers that offer them financial security in an uncertain world, new research shows.
Health insurance, paid time off and student loan repayment aid—in that order—were the top three benefits identified by recent college graduates and those approaching graduation when asked what benefits they most value from an employer.
The findings, based on responses from 547 job seekers who graduated from college in the last 24 months, or who will graduate in the next 12 months, were released by the American Institute of Certified Public Accountants (AICPA).
Young Adult Job Seekers' | |
| Benefit | Chosen in Top 3 by: |
| Health insurance | 54% |
| Paid time off | 45% |
| Student loan repayment | 41% |
| Working remotely | 38% |
| 401(k) fund match | 36% |
| Tuition reimbursement | 25% |
| Pension | 15% |
| Paid parental leave | 13% |
Source: AICPA. |
Tellingly, respondents with college debt most wanted any new benefit dollars from their employer to go toward helping them repay their loans.
It could be that a relatively low number of respondents (36 percent) selected 401(k) match as a top benefit because retirement may seem like it's in the distant future, said Gregory Anton, chairman of the AICPA's national CPA financial literacy commission.
He warned, however, that not contributing to 401(k) or similar accounts early in their careers can leave workers with insufficient retirement savings decades from now.
"A mentality of 'I'll start saving when I get a bit older' often results in retirement savings being put on the back burner," Anton said. "By beginning to save toward retirement as early as possible, new graduates will benefit from decades of compounding growth."
Student loan debt can also cause new graduates to overlook an employer's benefits package and focus solely on the salary offer.
"Wide disparities between health insurance options, employer retirement contributions as well as vacation and sick leave underscore the need for prospective employees to fully understand the value of the benefits being offered to them," Anton observed.
Survey results are posted on the AICPA's 360 Degrees of Financial Literacy website, which also features calculators to help individuals with decisions regarding 401(k) contributions, loan repayment and monthly budgeting.
Not every employer can, or should, add a loan repayment benefit, cautioned Lydia Jilek, senior director of voluntary benefits at consultancy Willis Towers Watson. "Employers hear the buzz about brands offering student loan benefits and think they need to follow suit. But don't do this just because it's the next hot thing," she advised. "Assess first if it's critical to your employees and prospects."
Technology, financial services and health care companies trying to attract workers in highly competitive markets are more likely to provide this benefit, as are "employers with headquarters off the beaten path, as a way to sweeten the pot and attract new talent to remote locations," Jilek noted.
Eight percent of organizations offer contributions to help employees repay student loans, up from 4 percent from 2016 through 2018, according to the Society for Human Resource Management's 2019 Employee Benefits survey results, based on responses from 2,763 HR professionals.
The U.S. Chamber of Commerce has put together a webpage with the latest student debt statistics.
Health Care Is Still Benefit No. 1 Despite the buzz around student loan aid, a very traditional benefit—health insurance—remains the top offering sought by all generations. "More and more, our Millennial employees are realizing that they need to pay attention to their health care benefits," said Jocelyn Durfield, vice president of HR at Strike, a pipeline and energy infrastructure firm with employees across the U.S. "With many just coming off of their parents' plans, they often are unsure about what to consider when selecting a benefits plan, and how to best use it for care throughout the year," she said. Strike educates Millennial employees on their options, "so they can pick the plan that best meets their needs, and then effectively leverage that plan to make smart, cost-conscious health care decisions for any treatment they require year-round," Durfield said. In engaging Millennials about health care benefits, "it's important for us to meet them where they are," Durfield said. "We've had success reaching out to Millennials via text messages—sending them links to our benefits page," developed with DirectPath, a benefits education, enrollment and health care transparency firm. "The more mobile you can go, the more you can get Millennials to pay attention," she noted. The company has also had success using incentives, "such as raffling off Apple watches or gift cards during open enrollment to encourage employees to complete their plan selections early," Durfield pointed out. |
Keeping Millennials Onboard
HR consultancy Mercer also recently examined younger workers' attitudes about pay and benefits. Earlier this year, the firm's analysts mined a data set of over 2 million employee records across different industries to ascertain the top reasons, by generation, that employees quit jobs. For Millennials ages 24 to 39, the research showed the following:
- Base pay matters. The higher base pay is as a percentage of total compensation, the stronger the retention effect on Millennials, Mercer found. Other studies have noted the importance of salary as well. Because they feel financially insecure—due largely to student loan debt—Millennials may be more averse than their older counterparts to having pay tied to their performance, rather than guaranteed. In other words, they aren't certain that variable, performance-based pay—ranging from bonuses to stock-based compensation—will be reliable sources of income.
Response: Communicate how variable pay works by showing clear connections between performance goals and financial rewards. Demonstrate how performance-based pay can help workers increase their income.
- Career advancement matters. Recently promoted Millennials are substantially more likely to leave their employers, so they might be using promotions to secure better opportunities elsewhere. High performance ratings also don't seem to keep Millennials from leaving employers and are, instead, associated with greater turnover. This suggests that positive feedback inspires confidence and encourages these workers to seek better pay and career advancement.
Response: Develop and share career path trajectories, showing younger workers how they can earn higher pay and leadership status in the organization.
- Supervisor relationships matter. Compared to other generations, Millennials are far less likely to leave if their supervisor is highly rated (or, interestingly, is a woman), and they are substantially more likely to quit if their supervisor quits. Because their loyalty tends to be to the person they report to, they're prepared to leave when that relationship no longer anchors them to the organization.
Response: Show workers that the organization values and cares about them. Here's where benefits such as financial wellness offerings—including student loan aid, if feasible—play an important role.
Workplace flexibility such as alternative work arrangements have long been touted as a retention benefit. But they may be overrated when it comes to Millennials, Mercer found. Offering flexible employment did less to retain Millennials than older workers, the analysis showed, perhaps because younger workers are waiting to have children until their careers are further along.
"Hard dollars, predictable variable pay and effective supervisors may be what it takes to improve employee experience and motivate the Millennial workforce to stay," concluded Tauseef Rahman, a Mercer principal and co-author of the report.
"While these findings were detected in our statistical modeling across our dataset, effects vary from company to company," he added. "It's important for each company to understand the statistical drivers of turnover for their workforce by generation—and what these statistical drivers reveal" as regards benefit selections.
[SHRM members-only how-to guide: How to Design an Employee Benefits Program]
Facing an Uncertain Future
Additional findings about Millennials, also called Generation Y, are highlighted in Mercer's 2019 Global Talent Trends report, based on responses from more than 4,800 employees and 1,600 HR leaders. This study found that:
- One in three Millennial employees are concerned that AI and automation will replace their job in the next three years, more than older generations.
- They are more likely than older generations to take on a new project at work without extra pay or benefits, or to exchange vacation days for experiences in other departments, to help diversify their skills "portfolio."
- At the same time, they are more willing than older workers to consider freelance or contingent work (84 percent of Millennials vs. 74 percent of Baby Boomers), if they feel it will lead to better opportunities down the road.
While the potential for long-term career opportunities is Millennials' number one reason for joining an organization, job security and opportunities for professional development are the main reasons they remain loyal, the study found. As with all the generations in the workplace, competitive compensation is the main reason they leave.
Related SHRM Articles:
Many Grads Have Regrets About College, SHRM Online, July 2019
Employers Boost Benefits to Win and Keep Talent, SHRM Online, June 2019
Time to Pass Tax Relief for Student Loan Repayment Benefits, SHRM Says, SHRM Online, May 2019
Billionaires Paying Off Student Loans Isn't a Solution to Debt Problem, SHRM Online, May 2019
In a Tight Talent Market, an Employer's Help with Education Expenses Can Turn a Candidate's Head, SHRM Online, May 2019
Fine-Tune Tuition Benefits to Meet Talent Goals, SHRM Online, March 2019
Welcome, Generation Z: Here's Your Benefits Package, SHRM Online, July 2018
Related Resource:
Podcast: Student Loan Repayment Programs & Other Education Benefits, with Crystal Frey, SHRM-SCP, May 2019
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