Companies Lure New Workers With College Coaching, Student Debt Repayment

By Te-Ping Chen 

As companies compete for workers in the tightest labor market in years, they're rolling out new education benefits like college coaching and student loan repayments to recruit employees.

Rariety Monford, 27 years old, product supervisor at health-care company Abbott Laboratories, is a beneficiary. Growing up in Cincinnati as the daughter of a single mother, Ms. Monford was the first in her family to attend college. But it meant racking up $60,000 in student loans, which Abbott is now helping her pay down as part of a program launched this summer.

"It's a really good deal, especially right now early in my career," said Ms. Monford, who is also pursuing a master's degree in engineering management at the University of Houston-Clear Lake. Her employer is paying for that degree in full.

Unemployment is near an 18-year low, and many companies are competing for talent across industries by dangling extra perks. With student loan debt at $1.5 trillion and counting, according to the Federal Reserve, education benefits are top of mind, experts say.

"We hire close to 900 people a day," said Tim Massa, Kroger Co.'s senior vice president of human resources. Today's workers "want to know what companies will do to grow and develop them."

The grocery chain recently launched a program that offers up to $3,500 in education expenses annually to employees, including those who bag groceries part-time. HCA Healthcare Inc. plans to spend up to $300 million on worker benefits, mostly education-related, including a student loan repayment program it is rolling out next year. Home Depot Inc., which has already spent about $136 million on tuition reimbursement over the past 13 years, recently expanded worker eligibility for funding, eliminating a 90-day waiting period for tapping those funds.

Scott McGurl, a partner in Minneapolis at Ey, a consulting and accounting firm, had seen friends around him spend as much as $40,000 on college counseling and prep for their children. His employer offers the same service through College Coach, which provides one-on-one phone calls with college counselors, many of them former admissions officers with prestigious schools, as well as help with essay review. Mr. McGurl used his employer's service.

"It's a big decision and a huge investment," said Mr. McGurl, 47, of his son's college search. "We're nowhere near helicopter parents, but we're involved and we want the best for our kids."

Increasing salaries would be more costly and education perks make "employees feel appreciated," said Deniz Gevrek, associate economics professor at Texas A&M University, Corpus Christi.

This summer, Abbott began offering employees who pay at least 2% of their gross salary to student loans a new benefit. Abbott will contribute 5% of their salary into a 401(k), a tax-preferential arrangement the company obtained special permission from the IRS to create. Traditional student loan-repayment programs don't get the same kind of pretax treatment as 401(k) funds do.

The company hires more than 1,000 college-educated workers under age 35 each year, said Steve Fussell, the company's executive vice president. Many, like Ms. Monford, are struggling with college debt.

"Our assumption is this will actually pay for itself," Mr. Fussell said, adding that for such employees, it costs the company about 13% of their salary to replace them.

Abbott isn't the only company to make that calculation. In July, Bright Horizons, a child-care provider, began offering full tuition to child-care-center employees pursuing associate or bachelor degrees in early childhood education. The company estimates it will get $1.67 in return on every dollar invested in higher retention rates alone.

"It's not charity," said Peter Cappelli, professor at the University of Pennsylvania's Wharton School, who noted online university programs make it easier for companies to offer such perks "quite cheaply."

Research from the Society for Human Resource Management, an association of HR professionals, shows around half of U.S. employers offer to help fund undergraduate education for employees, up to $5,250 of which can be excluded from taxable income per year.

Chatrane Birbal, congressional affairs director at SHRM, said she expects more companies to step up spending on education perks because of the labor market. The percentage of employers offering college selection and referral programs has already more than doubled since 2014, to 10% today.

Lindsay Tharp, a 37-year-old nurse in Missouri, attended community college before transferring to nursing school two decades ago. She said navigating the admissions process with her son, now a student at the University of Missouri, felt extraordinarily complicated. It meant heated conversations over how to balance his desire to study at Kansas State University, a more expensive out-of-state option, with their financial needs, she said.

"It's a very big burden, because your children are looking to you for answers in waters you haven't navigated," said Ms. Tharp, who works for DaVita Kidney Care, which began offering college counseling last year. Ms. Tharp received help from the counseling service.

Ms. Birbal said the uptick in interest from employers in school-related perks reminds her of how employer-sponsored health programs partly grew in response to World War II, when the U.S. also faced a labor shortage and companies offered health insurance as a way to compete for workers.

"In a few years, like health insurance, these could also become a new norm," she said.

Write to Te-Ping Chen at [e-mail]

(END) Dow Jones Newswires

October 03, 2018 08:14 ET (12:14 GMT)

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