April 30, 2018
PUBLISHED BY Marisa Kendall
SOURCE The Mercury News
Sexy office perks like free food, gym classes and tropical retreats are so last year. These days, a growing number of companies are offering employees a more practical incentive — helping them pay off their student loans.
San Mateo-based Coupa Software this year rolled out a new program that contributes $50 a month toward eligible employees’ student debt, and other local companies including Nvidia, Chegg and Hewlett-Packard have similar perks. It’s a service in high demand as Americans owe nearly $1.5 trillion in student loan debt, and paying down those loans — especially in the pricey Bay Area — can make it difficult to afford rent or to buy a home.
“You can’t imagine saving for a house,” said Scott Thompson, CEO at San Mateo-based student loan repayment startup Tuition.io. “Forget saving for retirement, if you’re struggling on a daily basis with paying off the debt.”
Many companies already contribute money to their employees’ 401(k) plans, but student debt — not future retirement — is often a more pressing issue for today’s young workers. Tuition.io’s platform, launched about three years ago, helps companies figure out how much student debt their employees have, set up loan-repayment plans and facilitate the payments. It announced a deal in February with Coupa Software, and so far, 62 out of Coupa’s 475 U.S. employees have signed up.
Justin Stern, a 25-year-old financial analyst at Coupa, expects the new program will help him pay off his debt up to two years faster. Stern pays about $250 a month toward his student loans, on top of the $2,200 he pays monthly for the 500-square-foot apartment he shares with his girlfriend in San Mateo. The student loan payment has a major impact on his finances, Stern said.
“It definitely is another expense that is hindering moving forward on any other financial goals — buying a house, getting a new car,” he said.
Stern isn’t alone. According to a national renter survey conducted by Apartment List, recent college graduates without debt will spend eight years saving for a 20 percent down payment on a condo — but those saddled with student debt will take 12 years.
The situation is even more daunting in the Bay Area. A smaller Apartment List survey of young renters in the San Francisco metro area — including Alameda, Marin, Contra Costa and San Mateo counties — found recent college grads with no debt will spend 12 years saving for a home. Recent college grads with debt will spend 27 years.
“Even for college grads without debt, they’re still in a pretty tough spot,” said Apartment List housing economist Chris Salviati. “And then adding student loans on top of that really makes it an untenable position for a lot of these Millennials.”
Read the full article on The Mercury News here.