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Why is this better than giving employees a $1200 higher salary and saving on the $6/mo fee? I understand that people are irrational and like benefits like this,
by qntty 8y ago
Why is this better than giving employees a $1200 higher salary and saving on the $6/mo fee? I understand that people are irrational and like benefits like this, but is there a tax benefit too?
- twiceaday 8y agoGiving employees a $1200 higher salary would not lead to an article in techcrunch on hacker news.
- swiley 8y agoNot everyone has student loans (I don't, my parents might be too nice) so it gives them a way to make it look like they're giving everyone a really great deal without having to give it to everyone (just a guess.)
- berdon 8y agoRaising everyone's salary serves as a permanent increase in compensation. It's very difficult to back-pedal from a salary increase. Other perks, which may boil down to monetary compensation, can be added/removed at will with far less push-back. I vaguely remember a story one time about google (or microsoft) and towels that an old manager told me. But I can't remember what it was. :(
- hinkley 8y agoOh god. The towels. That may have been the longest thread on Mini Microsoft ever. It was talked about for weeks. They saved $100,000 on towels and how many developers stood around the water cooler for hours complaining about it? I bet they lost more than that in labor costs.
- jdsully 8y agoMicrosoft has showers for people who bike to work with fresh towels provided. HR tried to remove that perk - probably thinking nobody would care because only a few people used it. Turns out a lot of people cared.
- flukus 8y ago>Raising everyone's salary serves as a permanent increase in compensation. It's very difficult to back-pedal from a salary increase. Even with google chipping in aren't we talking a decade or more to pay off a student loan? What percentage would even still be at google by then? For all practical purposes it seems like a permanent increase. Is it more about weird accounting?
- gringoDan 8y agoIt looks like this could perhaps be categorized under "educational assistance", saving both the employee & employer taxes. Essentially you'd be able to pay back your student loans pre-tax, rather than post-tax.
- koolba 8y agoIf that’s truly the angle then the IRS is going to have a field day with this as “educational assistance” is meant to incentivize new spending.
- jetrink 8y agoCurrently, that is not true, but bills have been introduced in the House and Senate to create such an exemption. 1. https://www.scribd.com/document/399496280/116-Congress-Employer-Participation-in-Repayment-Act-One-Pager https://www.scribd.com/document/399496280/116-Congress-Emplo... 2. https://www.congress.gov/bill/116th-congress/house-bill/1043 https://www.congress.gov/bill/116th-congress/house-bill/1043
- hinkley 8y agoPerks in lieu of cash have a history that goes back to much more progressive tax structures. I don't know that they always work out that way these days, but the benefits also represent something they can claw back later. Taking away a small perk and giving you a shitty raise gives them an overall cost reduction relative to inflation. Cutting your salary is much more overt.
- dragonwriter 8y ago> Why is this better than giving employees a $1200 higher salary and saving on the $6/mo fee? It is better, from the employer’s perspective, because it is a new way to slide age discrimination under the radar.
- labster 8y agoHow is it age discrimination? There are tons of people in their 40s and 50s still paying off student loans.
- groby_b 8y agoBut the percentage of people who do decreases with age.
- defertoreptar 8y ago"Looking at the age group breakdowns from the Federal Reserve Bank of New York, there are more borrowers under 30 years of age than there are in any other age bracket." https://www.valuepenguin.com/average-student-loan-debt#age https://www.valuepenguin.com/average-student-loan-debt#age
- labster 8y agoI'm glad I asked this question, because there's a lot of interesting data in response. If you look at the long-term trends in the data, student loan debt is exploding in every age group in America. > Student loan debt for borrowers 60 and over has increased by 1,256% since 2004 And the end of the graph shows that the number of borrowers in each cohort is roughly the same size as the the number in a younger cohort ten years ago. Some of this is population and college admissions growth, but it also suggests that student loans are becoming a permanent condition, not something you expect to pay off. I acknowledge that it's age discrimination to offer this benefit (in isolation) for now, but as time goes on that will no longer be the case. The system is set up so that you need a degree to get a job, and you need to work until retirement to pay off the degree to get that job. Unless you're lucky enough to come from a family with wealth, of course.
- nsedlet 8y agoWe use Goodly at HireArt. There is no tax benefit - you are right that it has the same net effect as adding to the employee's salary for them to use to pay off their loan directly. We see it as a nice way to encourage good financial behavior (not unlike how many companies have default retirement contributions). And the fees are small enough to not make a big difference. I think we'd also be interested in a program that took the money out of people's paychecks for repayment - especially if the issuers would give the employees a discount in exchange for getting a reliable paycheck-backed repayment.
- dragonwriter 8y ago> I think we'd also be interested in a program that took the money out of people's paychecks for repayment - especially if the issuers would give the employees a discount in exchange for getting a reliable paycheck-backed repayment. Servicers already offer autopay with a slight (0.25%) discount direct to borrowers; not sure they have a.lot of reason to go to payroll deduction over “pull it out of your bank account”.
- walshemj 8y agoWhy could not companies do this direct via a salary sacrifice scheme and is this post tax or pre tax. And do companies get relief on their SS payments for doing this.
- neves 8y agoThis is a sensible politic. Temporarily help your junior employees that wasn't privileged enough to have their education paid. Everybody wins.