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2016

StudentDebt_Body.jpgBy Cathie Ericson.

 

Health insurance. Vacation. A 401(k) program. Student loan debt repayment. Wait, what? Believe it or not, student debt repayment programs are increasingly a benefit offered by some larger companies.

 

When you consider that the class of 2015 graduated with an average of $35,000 in student debt, it’s clear that younger employees are increasingly bowing under the crushing weight of student loans. In fact, The Department of Education has reported that approximately $1 billion in loans has been collected in each of the past few years through wage garnishment, a 40 percent increase from 2006. Given that recent graduates often start their careers at smaller firms, the potential collection burden to small businesses is significant.

 

Here are some ways that small business owners can help them with their burden, while earning the continued loyalty of these valued younger employees.

 

Consider offering assistance as a benefit

Seem like something only a larger company can offer? Not if you swap it out for another benefit. Consider that a study from Student Loan Hero, a website that helps borrowers tackle their student loan debt, found that nearly half of the workers it surveyed would prefer student loan repayment assistance to a 401(k) retirement plan match. Student Loan Hero took the results to heart; it offers a three percent match of an employee’s salary and allows each to choose if they’d like it to go toward student loans or a retirement plan.

 

Another small business having success with a student loan repayment option is Little Newtons Early Childhood Education Centers in Minneapolis. Owner Alise McGregor finds it’s a way to build loyalty among her younger workers, which helps keep her clients happy, since these younger workers are caring for their children all day. “Children benefit from consistent caregivers, so it’s important to us to invest in our team," she says.

 

StudentDebt_PQ.jpgAdvance money to allow employees to pay off their student loans early

AJ Saleem, director of Houston-based Suprex Learning, a private tutoring and test prep company, employs this unusual tactic to help his employees minimize interest fees. As a recent graduate who was able to pay off his loan thanks to family assistance, he started the program to help those who lack similar support. About two-thirds of his workforce is comprised of college graduates with student loans to pay off. Loans for part-time workers average around $1,500 a year; full-time employee loans are around $3,500 per year. “I intend for this loan to be a long-term benefit, so I allow them to delay paying me back until either they resign or they finish paying off their loans,” he says. Of course, if they leave they have to pay him back immediately, a condition they agree to prior to taking the loan. “I find their hard work and subsequent loyalty more than make up for the interest-free loan I’ve provided,” he says.

 

Teach them money management skills

As the owner of boutique consulting firm CDJ & Associates in Southfield, Mich., and the mom of five millennials herself, Camille Jamerson understands the need to help this group with money skills. One of the programs she offers her employees is a series of workshops on personal finance to help them with basic money skills many have never learned. She also developed a “Biggest Loser” contest that had participants compete to see who could pay down the largest percentage of their debt, given specific parameters. “These programs have been cost effective and have helped tremendously in garnering millennial loyalty,” she says.

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation


ParentalLeave_Body.jpgBy Heather R. Johnson.

 

If your small business has fewer than 50 employees you aren’t required to offer paid parental leave, or any leave at all. However, offering parental leave to new and growing families does wonders for employee morale, productivity, and loyalty. While six-plus weeks of paid leave may not be financially feasible for many small businesses, with careful planning, you can design a plan that accommodates parents and employers alike.

 

The Family Medical Leave Act (FMLA) states that businesses with 50 or more employees are required to offer 12 weeks of unpaid, job-protected leave to care for newborn or adopted children. FMLA exempts businesses with fewer than 50 employees. Yet, even unpaid leave costs small businesses money, considering contractor wages and the extra hours involved in spreading the work to other employees. However, experts say crafting a parental leave plan that helps new parents is worth the effort and expense.

 

“When employees return from leave, they have a higher engagement level, which means higher productivity,” says Carrie Ahmad, vice president of People for Turning the Corner LLC, a consulting firm for small businesses and job seekers based in Boulder, Colorado. “They also tend to stay with the organization longer because it stood by them.”

 

To design a plan that works for your business, consider one or some combination of the following benefits:

 

Telecommuting and flexible schedules

Employees appreciate flextime or the option to work from home, Ahmad says. “If the employee can work from home or work half days, he or she can continue to bond with their child and the employer can keep moving forward,” she says.

 

One Turning the Corner client offered eight weeks of partially paid leave followed by a period of telecommuting. The employee gradually eased back into full-time work over a 13-week period. Flextime and telecommuting provide a good compromise when the employer can’t afford to lose an employee for 12 weeks.

 

ParentalLeave_PQ.jpgDisability leave

Short-term disability insurance can cover a portion of an employee’s income during maternity or paternity leave at little cost. Employers can either pay for the coverage themselves or offer plans to employees as an optional benefit.

 

Project Frog, an architectural design startup based in San Francisco, offers a generous paternity leave program that combines company- and state-paid wages (up to 55 percent of weekly wages). When platform design manager Justin Mikecz took leave to bond with his first child, he received 75 percent of his salary for six weeks.

 

Under California’s Paid Family Leave program, Mikecz had up to one year to use those six weeks. “I often worked four-day weeks to take at least some of the burden off my wife,” he says.

 

Paid time off

Some companies allow employees to use their accrued Paid Time Off (PTO) to cover a portion of unpaid leave. Other companies require that an employee exhaust PTO before using any disability benefits or unpaid time. This option comes at a lesser cost to the employer, but leaves the new mom or dad with virtually no paid time off if either parent or child gets sick.

 

Giving employees the opportunity to stay home with their baby is a wonderful benefit that’s becoming more in demand. With financial ingenuity, you can design a family leave plan that both the employer and employee can afford.

 

 

Bank of America, N.A. engages with Touchpoint Media Inc. to provide informational materials for your discussion or review purposes only. Touchpoint Media Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media Inc. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.

 

©2016 Bank of America Corporation

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