Source: Adidas
Is Student Loan Reimbursement a Smart Employee Perk?
Adidas is joining some other employers offering a student loan assistance program as the pandemic-era student debt holiday ends.
The sportswear giant, whose North American headquarters are in Portland, OR, will contribute $100 monthly to qualifying workers. Employees across corporate, retail, and distribution centers who work 30 hours or more per week are eligible for the program.
“Paying for education should not hold our teammates back, so we are happy to support them with this benefit,” said Rupert Campbell, president of Adidas North America, in a statement. Adidas is also offering free financial counseling.
According to the Society for Human Resource Management, just eight percent of companies offered a student loan repayment benefit in 2019. In 2021, that figure grew to 17 percent, with 31 percent of companies planning to provide it in the future, according to a report by the Employee Benefit Research Institute.
Those offering loan repayment employee benefits include Google, PricewaterhouseCoopers, Estee Lauder, Staples and Peloton.
“It’s great to get a four percent company match on your 401(k). But that means nothing to someone with big student debt,” Reilly Anderson, a Portland benefits consultant at CSNW Benefits, told The Oregonian.
Two-thirds of nearly 2,900 employees surveyed as part of MetLife’s annual U.S. Employee Benefit Trends Study said they worry about paying down debt, including student and credit-card debt. Half of Gen Z and younger Millennial respondents indicated help paying down student loans is a “must have” benefit at work.
Payments for the more than 40 million Americans with student loans will resume in September as part of the bipartisan agreement to raise the federal debt ceiling after a three-year-long pause of payments as part of a pandemic relief measure.
The loan reimbursement perk would compete with other fringe benefits, including family care, health & wellness and retirement.
Responses to a Wall Street Journal article on the corporate student loan assistance trend mirrored themes in the national debate over student debt forgiveness, including whether such programs only subsidize colleges and whether reimbursement is fair to those paying off their loans without help from the programs. Some felt the costs would ultimately be paid for with higher prices for consumers.
Discussion Questions
DISCUSSION QUESTIONS: Are you for or against adding student loan reimbursement as an employee benefit? Do you view this perk as an effective way for retailers or brands to recruit and retain young talent?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Bob Amster
Principal, Retail Technology Group
Adidas is making the right investment. Anything that helps provide relief to the crushing burden of student debt is a good thing. Like all retailers, adidas needs more top people in their ranks, and this is a smart way to acquire and retain talent. Also, offering student loan reimbursement sends a clear signal to younger employees that adidas understands their financial challenges. Retail needs to be a career again—not something people do until a real job comes around.
I’m all for adding any employee benefit that makes a company more competitive in the “employee market” without affecting profitability or competitiveness in its “product or service market.” However, if I had to choose, I think I would rather give people a more solid financial education (like Adidas’ “free financial counseling”) and higher wages so that they can better help themselves. Maybe private and public sector initiatives should concentrate on the issue of student loans before the loans are made and route some funding to on campus, financial education initiatives (including high schools). No student should be allowed to borrow more than a proper percentage of what their future earnings will allow them to pay and we owe it to these students to educate them as to why that’s critically important.
For young workers coming out of college, this is a very nice benefit. Without seeing all the details, there could be some tradeoffs between this program and other retirement programs, but it certainly provides a path towards paying off a student loan while working and gaining industry experience.
This is a subsidy somewhat hidden as a perk. The more companies do this the further away from reality we get from consumers bearing the actual costs of going to school. I do like the way it differentiates the hiring firm from the field, and I also wonder about the incoming new hire–surely they did not start taking loans out with the expectation they would get hired by a firm with this on offer?
This is not a new concept, especially among professional firms. Adopting the concept and extending it to more employees has merit, but has to be implemented cautiously so that neither the employee and the employer do not lose. The employee should provide some reestablished length of service and the employer must deposit the future liability in an escrow account until it is disbursed. Other than this, it ir still a great idea.
Employee perks that are meaningful will drive employee loyalty and retention. Adidas is leading the pack here and I love the investment they are making in standing behind their people. This strategy is smart and has long-term benefits. Finding the right brand ambassadors and talent to join retailers is a tough business. This perk will no doubt bring in more talent and increase the likelihood of employees sticking with the brand.
This is an interesting iteration of the more traditional education reimbursement benefits offered by many employers and will set Adidas apart from others in a unique way. This investment Adidas is making in their human capital should strengthen talent recruitment and retention.
Gee, I didn’t know that Adidas HQ was in Portland, Oregon. That is just around the corner from that other sneaker company in Beaverton that has had tuition reimbursement for years. Maybe it took years for the U.S. division to convince HQ in Germany that employees paid for their education. Perhaps they had to do it to get better people than their cross-town rivals?
Tuition reimbursement is an ideal benefit for those that want it. It is tax-free for the employee and carries no FICA calculations for the company. It makes a dollar worth more than a dollar.
Sadly, we must design many convoluted ways to support people to expand their education.
Gee, I didn’t know that Adidas HQ was in Portland, Oregon. That is just around the corner from that other sneaker company in Beaverton that has had tuition reimbursement for years. Maybe it took years for the U.S. division to convince HQ in Germany that employees paid for their education. Perhaps they had to do it to get better people than their cross-town rivals?
Tuition reimbursement is an ideal benefit for those that want it. It is tax-free for the employee and carries no FICA calculations for the company. It makes a dollar worth more than a dollar.
Sadly, we must design many convoluted ways to support people to expand their education.
Student debt is a burden for many younger workers (some older as well!). That burden leads the workers to take second jobs and to live a more money-scarce lifestyle. Such a burden has to impact performance at work as well. Providing some level of reimbursement will improve performance on the job as well as increase retention. Well done, Adidas.
$100…a month ?!?! Despite what Miss Manners may advise – that every gift, however small, should be appreciated – I suspect most people will be underwhelmed by this offer.
To be sure, every plan can’t reimburse six-figures to everyone, but the value of “something is better than nothing” gets close to that latter number as the reimbursement amount does the same.
It’s a great attraction strategy. But perhaps more importantly, a great retention strategy too. Employee churn costs a lot of money. Not just in recruiting, but also training. So if you can ‘plug the leak’ it not only helps drive costs down, but helps keep both talent and knowledge within your organization as well so you can spend less time ‘getting people up to speed’ and more time innovating.
Student loan reimbursement is good move my Adidas. The student loan benefits are becoming more common at companies of all sizes. In 2021, student loan reimbursement program figure were 17 percent, while appr 30 percent of companies providing these benefits in 2023.
By making student loan benefits part of their overall compensation strategy, is an opportunity to assist future generations of workers—and attract key talent and improve employee loyalty & retention.
It’s a competitive offer that helps Adidas differentiate itself as an employee and the benefits will extend beyond the employees receiving the benefit.
Companies spend millions on Corporate Social Responsibility while ignoring their employee’s needs. With this move, Adidas will gain the trust of employees and customers alike. It’s a brilliant move and one that should be mimicked.
Until you’ve been saddled with enough student loan debt to buy a small third-world country–with zero help on repayments–then you will never know the real value of even $100 a month to help repay this debt.
Student loan debt puts less privileged employees at a disadvantage in terms of homeownership and wealth building. Companies who recognize this and offer programs to help employees close this gap are doing the right thing.
Those that don’t need this benefit don’t understand it and those that chide companies for offering this benefit need a lesson in compassion.