Paying off student loans has become the new cool. Last month, billionaire Robert F. Smith, CEO of Vista Equity Partners, pledged to pay off the debt for his alma mater’s graduating class. It was a hard act to follow (although Burger King tried).
Now, a publicly-traded education company that serves millions of college students has ramped up student debt relief services for its own employees.
Chegg, based in Santa Clara, Calif., is offering entry-level and manager-level employees in the U.S. up to $5,000 a year more on student loan reimbursement through selling shares set aside for employees. Employees at more senior levels are eligible for up to $3,000 a year.
To be clear, this is not a new perk for Chegg employees. Since 2015, Chegg has offered $1,000 in cash to employees to use toward student debt, according to Jenny Braundemuehl, the company’s chief people officer. To date, about 20 percent of its 500-plus U.S. employees have taken advantage of the benefit, she says. (The company employs about 1,100 people worldwide.)
The new program—offered as an addition to the $1,000 cash benefit—operates differently. Chegg has set aside a pool of shares, from which it gives an employee a stock grant with taxes withheld as income. Chegg sells the stock for the employee and the after-tax cash goes to Tuition.io, a third-party company that works with employers to manage debt payments to the schools employees attended.
Braundemuehl expects the number of employees participating in this new debt relief program to rise. The idea came from an annual benefits survey that Chegg performs, which in the past has spurred its human resource team to provide other employee supports around childcare and commuter benefits.
“We want to de-stress everything outside of work as much as possible for employees,” Brandemuehl says.
Chegg is hardly the only company that provides financial support to help its employees pay off their student loans. A Forbes article dubbed student loan repayment “the hottest employee benefit of 2018,” with companies as varied as Fidelity, Live Nation, Nvidia and Penguin Random House all offering some form of assistance.
Growing alongside these employee benefit programs are a new crop of service providers that aim to help companies manage student loan benefits. Earlier this year, FutureFuel.io, a New York-based startup that provides this service, raised $11.2 million in venture capital.
Student loan debt in the U.S. has reached $1.5 trillion, according to the latest estimates.
Student loan repayments have entered the national conversation in political and education circles, with several Democrats running for president voicing support for a debt-free college plan. Even just a tax break on employers targeting student loans as a benefit would help other businesses adopt the program, Brandemuehl says.
A survey of 1,000 Americans ages 18 to 34 conducted by Self Lender, an online loan provider, found that six in 10 with student debt would give up part of their benefits package for student debt forgiveness.
“Boards and management teams should challenge themselves” to provide student debt relief to their employees, Brandemuehl says. “This is the future workforce. They’ve got to start thinking about the benefits they want to offer.”