January 10, 2022 / Thought Leadership
Inside CP’s Student Loan Paydown Program
Connelly Partners Benefits Administration
The recent Massachusetts State Legislation bill H-2985 proposal introduced by Rep. Kate Lipper-Garabedian is a major development to help address the crushing student loan debt crisis. The proposal would offer companies who contribute to their employees’ student loan debt with an annual $2,000 state tax exemption per employee. It’s no secret that the cost of obtaining a college education has skyrocketed in the last twenty years, far outpacing wage growth. This concerning trend shows no sign of stopping and, as a result, an entire generation of the workforce faces a perilous financial headwind. Four-year colleges costing upwards of $300,000 is an eye-watering amount for both parents and students alike.
As an employer, we share a responsibility in the student loan debt crisis.
At Connelly Partners, we feel that we share responsibility with our employees, as job requisition requires a college degree to maintain a talented workforce to best serve our clients.
An alarming trend developed at Connelly Partners as 401k participation rates among our younger employees was low. A benefits package should address the needs of the entire workforce demographic. Building a generous 401k matching program and supporting robust medical related insurance offerings is an obvious starting place. As benefit administrators, we must consider that our “under 26” employees in their first or second job out of college are most likely still going to be dependent for medical insurance purposes. Therefore, a benefit this employee can take advantage of is starting contributions to their retirement savings. Well, let’s face it, it’s extremely hard to save for retirement with tens of thousands of dollars of student loan debt payments looming ahead.
At Connelly Partners, we wanted to do something about this. So, we did.
In June of 2016 we became the first advertising agency to partner with Gradifi to introduce a Student Loan Paydown benefit for all our employees. The program is a five year long commitment to our employees to help pay down their student loan debt faster with monthly employer contributions paid directly to the student loan balance.
The long and short of it? We make direct monthly contributions to employees’ student loan principals over the course of five years for a total of $10,000 per employee. Since June of 2016, Connelly Partners has contributed over $300,000 and counting to our employees’ student loan debt.
Offering the Student Loan Paydown Program has not only added an important benefit that appeals to the younger workforce, but also increased the participation rate of our 401k retirement plan to one of the highest percentiles in our industry. We couldn’t be happier with the trend reversal to support long term financial wellbeing for all our employees.
We understand there is no easy solution to the student loan debt crisis. We applaud bill proposal H-2895 as a step in the right direction between government and employers. However, it’s not enough. According to 2022 State House News Service, this bill tax proposal is estimated to cost Massachusetts $1.8 to $6.7 million annually. For perspective, Massachusetts collected $34.14 billion in taxes in 2021. For the greater good of confronting the student loan debt crisis, we hope there will be much more to come by both state and federal governments. In the meantime, we continue to combat this crisis with our paydown program. Why? Because it’s the right thing to do.