More than ever, the ability to attract and retain top talent is critical to the success of businesses of all sizes, making it vitally important that organizations offer competitive benefits.
Typically, these have consisted of healthcare, vision, dental, PTO, and the like. But with more than $1.7 trillion in student loans and countless Americans putting off major life milestones like purchasing a home due to debt concerns, employers are increasingly looking to student loan repayment and educational savings benefits to meet the needs of prospective and current employees.
John Burns Research and Consulting is one such company.
Did you know?
A 2017 study found that around 90% of young employees would commit to working at a company for five years if provided student loan repayment assistance. What’s more, about half of young workers regularly worry about their college loans.
The company:
John Burns Research and Consulting (JBREC) is a renowned real estate research firm focused on providing executives with valuable insights to aid them in making informed investment decisions in the housing industry.
With a workforce of 200 employees, the company emphasizes the importance of offering a comprehensive benefits package that allows employees to allocate funds to the benefits most valuable to them.
The challenge:
As a certified “Great Place to Work,” John Burns Research and Consulting prides itself on attracting and retaining the most passionate, articulate, likable, and smart (PALS) team members. Key to this is offering a highly competitive benefits package, which includes giving employees $12,000 to choose their own benefits.
So when several employees inquired about using those funds to pay down student loan debt, their HR department knew it was something they needed to look into. After all, the average bachelor’s degree student borrows more than $30,000 for college, many considerably more.
Unlike offering employees health and wellness plans, employers have only recently started to look at student loan repayment as a viable option.
Just a few years ago, these employer contributions were treated as additional taxable income. But that changed in 2020 with the SECURE Act, which allowed employers to contribute up to $5,250 toward an employee’s student loans tax-free.
Still, they would need help offering student loan repayment benefits to their employees. Not to mention, in order to contribute tax-free, JBREC would need to set up an educational assistance program under the requirements of IRS Code Section 127 — something few HR departments have the resources for in-house.
Recognizing the need for a seamless and integrated solution, the HR department sought a provider that could easily incorporate student loan benefits into their existing program without adding complexity.
The solution:
SavvyFi offers a comprehensive platform combining student loan benefits and 529 plan options, aligning perfectly with the company’s objective of offering employees greater flexibility.
What is a 529 plan?
A 529 plan is a type of savings account specifically designed for education expenses, where you can save and invest money over time, with potential tax benefits, to help pay for a beneficiary’s education. What many people don’t know, however, is that they can sign up for a 529 plan through their employer. Find out how employer-sponsored 529 plans work.
Thanks to SavvyFi’s platform, employees can efficiently manage their student loans and set up digital 529 accounts, simplifying the process for both them and the HR team. Additionally, SavvyFi provided support in setting up a Section 127 plan to enable tax-free employer contributions.
The results:
Upon launching the SavvyFi program, John Burns Research and Consulting saw an immediate 10% adoption rate among employees, with participating employees allocating just over $2,200 per year.
Of those employees who enrolled, three out of four elected to put their benefits toward a 529 plan option, while the remaining 25% opted to use a portion of their benefits to pay down student loan debt.
However, the potential impact of the program extends well beyond a single year’s contribution. As with investing in a 401(k) plan, the real difference-maker is time.
For illustrative purposes, let’s say one of your employees enrolls in an employer-sponsored 529 plan when their child turns 7 years old.
Assuming 7.5% annual returns, an employer contribution of $5,000 a year would yield nearly $90,000 when the child graduates from high school at age 18. That’s according to SavingforCollege.com’s helpful 529 calculator.
Now, consider an employee who allocates a portion of their flexible benefits to repaying their $60,000 in student loans.
By contributing $500 of employer benefits each month on top of their own $500 monthly payment, they can effectively reduce their repayment period from 12 years to around 6 years — in turn saving thousands of dollars in interest fees over the lifetime of the loan.
These figures highlight the substantial benefits that employees can achieve by participating in the integrated student loan and 529 plan solution offered by SavvyFi.
Recognizing the value in offering a solution to employees’ student loan burdens, the HR team at John Burns Research and Consulting demonstrated its commitment to supporting employees’ financial well-being. And despite the federal student loan payment suspension in effect at the time of launch, the company was able to get ahead of the curve in addressing a critical issue and helping employees navigate potential financial shocks.
Addressing the needs of today’s workers
Through the implementation of SavvyFi’s integrated student loan and 529 plan solution, John Burns Research and Consulting successfully expanded its benefits package and provided employees with greater flexibility.
The company’s decision to partner with SavvyFi not only addressed the needs of employees with student loans but also enabled them to proactively save for their children’s education through employer-sponsored 529 plans.
By looking forward and offering innovative benefits, JBREC proved once again that the company cares deeply about the well-being of its employees. No wonder 94% of employees call John Burns Research and Consulting a great place to work!
Want to learn more about how SavvyFi can help you offer your employees a more competitive suite of benefits? Book a free demo today.
About SavvyFi: SavvyFi is a user-friendly fintech platform that makes it easy for employers to provide college savings and student loan benefits to their employees. Because the company’s platform is “zero-touch” to HR — without any complicated systems, integrations, or paperwork — SavvyFi unlocks education financing capabilities to even the smallest employers that would not otherwise be able to offer these benefits.
Disclosure: Third-party quotes shown may not be representative of the experience of all SavvyFi customers and do not represent a guarantee of future performance or success.
