How One School Is Tackling Employees’ Student Loan Debt

First Republic Bank
May 14, 2019

A 401(k) is a cornerstone benefit, but it isn’t addressing one of the most pressing financial concerns facing American professionals today: student loan debt. With over 1.5 trillion owed — and rapidly growing — student loan debt is now the second largest type of consumer debt in the country behind home mortgages. In the field of education in particular — for which advanced degrees and continuing education are mandatory to qualify for competitive academic positions — it is especially challenging to pay down student debt and pursue other short- and long-term financial goals while living on a teacher’s starting salary.

"Educators today all need a minimum of a master’s degree,” says Freda Gimpel, CFO at The Town School, a prestigious elementary school in Manhattan’s Upper East Side. “And we have many faculty members with multiple masters’ and Ph.Ds.” Professional development and continuing education for teachers is a big investment and, in turn, a large fiscal burden: The average debt for a graduate with a master's degree in education is more than $50,000 — a full $8,000 more than the debt of a typical MBA graduate.

“This is a massive societal issue that is only getting worse in terms of the number of grads who leave school with debt,” explains Todd Rassiger, Head of East Coast Business Banking at First Republic and former Acting President of Gradifi, a First Republic company focused on alleviating the student loan debt crisis.

"Add in the high cost of living in major metro markets where top institutions are often located,” Todd says, "and you essentially have a perfect storm facing education professionals."

Addressing the evolving needs of employees

Forward-thinking employers like The Town School are embracing creative solutions to help support the financial wellness of its employees while attracting and retaining top talent.

As an independent school, Town has limited resources to put toward employee benefits. Still, ensuring its employees are taken care of remains one of the institution's core values. “We want to make sure that we have real impact with the dollars we spend — to get the most bang for our employee benefit buck,” says Freda.

That’s where Gradifi comes in. With employee programs designed to solve pressing workforce needs, Gradifi offers innovative benefits including: 

  • Student Loan Repayment: A survey by American Student Assistance® (ASA) found that 59% of young employees would prefer their employer help them pay down student loans rather than contribute to their retirement savings. In response, Gradifi’s Student Loan PayDown program helps organizations like Town make direct contributions to employees’ student loans.
  • Student Loan Refinance: Of the $1.5 trillion in student loan debt in the country, only 3% has been refinanced. This low rate is due, in large part, to the fact that the refinance process can seem overwhelming and counterintuitive. The solution? Programs such as Gradifi Refi help Town staffers research and choose better loan options at competitive interest rates.
  • College Savings: As tuition costs continue to inflate, today’s workforce is not only grappling with their own loans but stressing over how to save for their own children’s future education. Gradifi’s College SaveUp was created for that segment, providing a simple way for employers to make contributions toward employee 529 college savings plans.
  • One-on-one Counseling: When it comes to finance, confusion often prevents meaningful progress. Providing employees with one-on-one access to student loan and college planning counselors at no cost who can help them understand loan terms, the impact of student loan debt, repayment strategies, and how to fund higher education can be of tremendous benefit. This perk was rated as the most desired employer benefit they don’t currently have by a quarter of employees in a PwC survey.

When Freda first heard about Gradifi and its Student Loan PayDown program, it instantly seemed like a great fit: it was easy to implement, it fit her budget and it had the potential to make a meaningful difference for her employees. “It seemed like a Student Loan PayDown program would have the most impact on the lives of our employees for their mental and financial well-being,” says Freda, adding, “It’s in conjunction with the other things that we’ll also continue to do, like providing excellent medical and dental benefit plans.”

Although the amount spent per person, per year wasn’t a tremendous investment in the grand scheme of things, the program proved a much bigger deal to its recipients.

Gauging employee impact

“I remember when we announced that we were rolling out Gradifi, we actually had several employees gasp,” says Freda. “Everyone applauded, even those who had no debt. It just lifted everyone.”

Employees cited a variety of reasons why the benefit was meaningful to them, but the common denominator was a sentiment of gratitude towards the school. One employee remarked that the program “reminded me that Town is a great place to work” and another shared that “Gradifi shows that Town does consider the wellbeing of staff when making decisions.”

Freda continues, “If a young teacher is choosing between offers in an area where there is a lot of competition for good teachers, anything you can do to get an edge to have that individual select your school is a real benefit.”

It’s worth noting that financial wellness benefits — such as those related to student loans and college savings—are relevant to academic employees at all different career levels. A new teacher, for example, might be so burdened with debt they’re unable to find affordable housing close to work. A tenured teacher might still have lingering loans impacting his or her ability to maximize retirement savings. Seasoned administrators might need resources on how to prioritize helping their children or grandchildren afford college while preparing for their own retirement. The perk can be tailored to the unique needs and resources of virtually any employee.

Best practices for choosing new benefits

Ready to support your workforce in their quest to succeed financially? The following steps can help any educational organization get on track to doing just that:

  • Survey employees to understand their needs. At The Town School, Freda’s team regularly surveys employees to find out which benefits mean the most to them. “Asking people their opinion goes a long way toward morale,” she says.
  • Choose benefits that fit your values and budget. “It’s becoming the norm that organizations with great cultures that are focused on their employees’ wellbeing are adding Gradifi to their offerings,” Todd says. For the education sector in particular, benefits tied to making education more affordable can be a game changer.
  • Include an educational component. Taking the confusion out of finance — and, consequently, reducing employee stress — can be a powerful way to make an impact beyond dollars and cents.

Visit Gradifi to learn more about its Student Loan PayDown, Student Loan Refinance and College SaveUp programs.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the consequences of any strategies mentioned in this document. The information has been verified by the author, but it does not constitute legal or tax advice and First Republic is not acting as your attorney or tax advisor. This information is governed by our Terms and Conditions of Use.