Problem Analysis
Alabama Credit Union discovered their employees have a student debt burden similar to other Americans, with balances averaging between $26,500 and $36,000. They realized they could make a difference in the lives of their employees by launching Peanut Butter Student Loan Repayment, a unique benefit that allows ACU to contribute monthly to their employees’ student loan debt as an employer-provided benefit. Like many employers, ACU also recognized that a unique benefits offering like student loan repayment could help them attract and retain their talent, too.
Student loan debt has become a huge burden, especially to Millennials. Fox Business reports that U.S. Student loan debt has more than doubled since the end of the recession in 2009, reaching a record $1.465 trillion. And, the Federal Reserve Bank of New York, Bureau of Labor Statistics and CNBC confirm that the burden is shouldered by over 44 million Americans, which equates to approximately 28 percent of the U.S. workforce, including 70 percent of recent graduates. This amounts to decades of student debt burden for employees and a major deciding factor in employees’ life decisions. Even a more modest student debt burden of $53,000 for couples with bachelor degrees leads to a lifetime wealth loss of nearly $208,000.
Solution Implementation
Alabama Credit Union chose to implement a best-in-class approach for a pilot, which is now their long-term, ongoing program. For a modest $50 monthly employer-sponsored contribution, ACU is helping its employees’ chip away at their student loan principal and interest payments and experience significant debt relief.
This employer-sponsored contribution achieves maximum impact because it is made in addition to the employees’ minimum monthly payments, which they continue to make. Another best practice, this approach keeps ACU from getting into tricky situations with employee due dates for minimum payments, reduces employer time to administer the program by simplifying record-keeping needs and eliminates potential missed-payment fees.
“I’ve never implemented a benefit that was as easy as Peanut Butter made this one.”
— Brandi McKinney, AVP Human Resources, ACU
Results
In its first six months, ACU saved 33 of their employees (12 percent of their workforce) over $18,000 in principal and interest payments. This gets their employees out from under their student loan debt seven years faster than minimum monthly payments alone can achieve.
In addition, a survey of ACU employees also revealed:
- Decreased financial stress: 80 percent of those surveyed said this benefit decreased their level of financial stress.
- Increased loyalty: 90 percent of those surveyed said they were less likely to leave the credit union because of its student loan assistance repayment program.
“I’m astonished and incredibly grateful that my employer is paying toward my student loan debt. It helps me see the light at the end of my tunnel of debt.”
–Martha L., ACU employee
Is your company ready to help ease the burden of student debt on employees and differentiate when it comes to attracting and retaining talent? Click below to schedule time with a member of our Client Solutions team about how Peanut Butter can support your organization’s goals.