Americans owe about $1.2 trillion in student loans. For undergraduate and graduate degrees, roughly 10 percent and 40 percent, respectively, of those with debt owe a staggering amount: more than $50,000. A lucky few won’t have to pay this off on their own; their employers will help, via benefits that a small number of companies are offering to their workforces.
The benefits tend to come in one of three forms: tuition assistance (which pays for school directly for employees who are currently enrolled), student-loan payment assistance (which helps graduates pay off their existing loans), and consolidation and refinancing opportunities. That last tool is a newer and less common perk. Refinancing can make a huge difference for those with significant debt; by lowering interest rates it can drastically reduce the total amount of money paid. “There’s a huge population who have graduated and have great jobs. They’re a vastly different credit risk and there should be an option where you’re evaluated as a credit risk today,” says Catesby Perrin, the head of business development at SoFi, a loan consolidation and refinancing company. “They’re overpaying.”
SoFi’s model is predicated on refinancing the loans of those who are a lower credit risk after graduating than they were when they took on the loans at the age of 17 or 18. SoFi offers its services not only directly to consumers but also via companies’ benefits plans. The payoff goes both ways, Perrin says: It makes employers more attractive to candidates who’ve gone to impressive, expensive schools and racked up lots of debt for their resumes. And SoFi gets to automatically market to, and potentially wrangle, a whole new group of clients with minimal effort. The plan has enticed companies including IBM and Kronos, a management software company, who now include information about SoFi benefits to their hires and then sign employees up for the service, currently at no cost to the employer. (Some employers are also working with SoFi to administer corporate contributions directly to employees’ student loans and to give bonuses that go right into student-loan payments). David Almeda, the chief people officer at Kronos told me that Kronos had more than 300 people sign up in the two months after announcing the benefit; a representative from IBM said that more than 500 employees had refinanced using SoFi in the past year and they’re saving an average of $17,000 over the life of their loans.