Good morning.
After a three year pause, U.S. federal student loan payments are set to resume Oct. 1, and you better bet your employees will be affected.
The Society of Human Resource Management’s 2023 employer benefits survey found that only 8% of organizations said they offer student loan benefits to employees. I talked with some companies that offer the benefit, and the common thread for doing so is to support employee financial well-being and to attract and retain talent.
Take for instance Nvidia, the leading maker of data center gear used in AI systems, that has now positioned itself as the key beneficiary of the AI boom. Back in 2016, the company decided to help recent graduates pay back student loans.
Nvidia offers all U.S. employees who have graduated within the past three years with a U.S. student loan reimbursement as a benefit, according to a company spokesperson. Employees (full- and part-time) who work 20 or more hours per week are eligible for up to $350 per month toward student loan repayment. There is a lifetime maximum of $30,000. However, contributions must be in addition to an employee’s regular monthly payment and made directly to the loan servicer.
I asked Colette Kress, EVP and CFO of Nvidia, why this benefit remains a priority for the company. She explained it’s a recruiting tool and allows employees to plan “for the future so they can focus on doing their life’s work here,” Kress says.
Taking a look at the retail industry, Tracey T. Travis, EVP and CFO at The Estée Lauder Companies, shares a similar perspective. Travis says she’s “particularly proud” of the company’s Student Loan Contribution Program. The company contributes up to $100 per month toward an eligible U.S. employee’s student loan with a lifetime maximum of $10,000. The student loan repayment program began in August 2017 with the first payments being made in September 2017.
It’s not just a nice-to-have option, according to Travis. “We believe that contributing to student loan repayments is not only a strategic business decision, but it’s also the right thing to do,” she says. This helps the company to “strengthen and grow our incredible talent base, while enriching the lives of our employees and the communities in which we live and work,” Travis says.
Jesse Moore, SVP and head of student debt at Fidelity Investments predicts that many employees are feeling “overwhelmed and concerned—and rightfully so.” For the last three years, 60% of Federal student loan borrowers have been taking advantage of the payment pause, Moore says. He also points out that some younger student loan borrowers have never made a student loan debt payment before, Moore says.
Fidelity’s 2023 College Savings + Student Debt Study found that two-in-three recent college graduates taking advantage of the Federal student loan payment pause have “no idea how they are going to start repaying their student loans once the emergency pause is lifted,” he says. And one of the primary ways employers are leaning in to help is by making payments directly toward their employees’ student loans, Moore says.
Fidelity began offering its student loan assistance benefit to associates in 2016. Currently, eligible associates who are regularly scheduled to work at least 30 hours per week can enroll in the program to receive a maximum of $15,000 over a maximum of seven years’ worth of monthly payments.
Moore says an additional way employers are assisting employees is under the Secure Act 2.0 of 2022, which allows offering a match into a retirement plan when the employee makes a student loan debt payment.
A Fidelity analysis of its clients offering a student debt repayment plan found a 78% overall reduction in turnover, Moore says. That’s a stat that any finance pro can appreciate.
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
John Gardiner was named CFO and COO at Pantheon, a SaaS-based website operations platform. Gardiner has more than 30 years of experience across global, high-growth cloud businesses. He previously served in leadership roles including ZoomInfo president and CFO at Sitecore.
Tom Vadaketh was named SVP and CFO at Enviri Corporation (NYSE: NVRI), a provider of environmental solutions, effective Oct. 16. Vadaketh will succeed Pete Minan, who previously announced plans to retire. Vadaketh joins Enviri with more than 30 years of financial experience, most recently serving as CFO of Bausch Health. He began his career at Deloitte & Touche and held several senior financial positions across many countries at Procter & Gamble and Tyco International. Vadaketh has also been CFO of various public and privately held businesses.
Big deal
The ProxyPulse report was released on Tuesday by fintech Broadridge Financial Solutions, Inc. One of the key findings is the 2023 Proxy season was notable for the continued wide divergence in voting sentiment between individual and institutional shareholders. For example, individual investors cast only 16% of their votes in favor of environmental and social proposals while institutions cast 25.5% in favor.
Another key finding is companies and shareholders continue to realize the benefits of online meetings, and technology continues to advance the trend. In the first six months of 2023, there were 1,815 “virtual-only” meetings, close to the all-time highs during the pandemic (1,832 in 2022 and 1,891 in 2021).
Courtesy of Broadridge
Going deeper
“Does Moving to Another Country for Work Lead to Higher Pay?” a new report in Wharton’s business journal, discusses how working abroad can give you invaluable experience, but beware of the costs. Research by Wharton’s Martine Haas and Matthew Bidwell delves into the relationship between moving to another country and professionals’ compensation.
Overheard
“It sure looks like [$100 a barrel is going to happen]. We’re certainly motoring in that direction. Supply is tightening, inventories are drawing, these things happen gradually—you can see it building.”
—Chevron CEO Mike Wirth said in an interview with Bloomberg TV. Although the U.S. Energy Information Administration sees average prices increasing in Q4 2023, the agency expects prices to come back down by Q2 2024, Fortune reports.
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