Americans now hold more student loan debt than ever before, and many workers must pay off loans before they can start thinking about their financial future.
Americans hold $1.4 trillion in student loan debt. For young workers, in particular, loan debt is often their most significant financial burden. In order to compete for talent in a tight labor market, employers are beginning to offer benefits like student loan repayment plans to better address the financial needs of their workers.
"We are proud to be the first municipality in the country to offer this kind of student debt assistance to our workforce. We view this as an important investment in our employees," said Alex Smith, City of Memphis Chief Human Resources Officer.
Beginning July 1, eligible Memphis city workers will receive monthly contributions of $50 towards principal repayment of their student loans — small change, considering that for the 27 percent of adults who borrowed money to finance their education, the average monthly payment is $533, according to the Federal Reserve.
Still, the program aims to help alleviate a growing problem facing a city with a shrinking population. In 2016, student loan debt in Memphis grew nearly five percent, compared with three percent nationally.
"[Memphis'] initiation of this program should be a clarion call for other municipalities to follow suit," said Scott Thompson, CEO of employer-funded student loan contribution platform Tuition.io, which will manage the program.
"The burden of student loan debt is not a problem limited to private sector employees, and cities both large and small have significant numbers of workers who can benefit from debt reduction programs."