Should I Offer Student Loan Repayment or a Travel Incentive?

There are a lot of benefits available for employees, but deciding which ones to implement in your business can be tricky. Two of the most popular benefits for 2019 include travel incentives and student loan repayment programs. Between these two options, there are some very big differences and it’s important to look at each aspect to decide what’s right for your business.
How do they work?
Before you choose a benefit, it is important to understand how it really works. Student loan repayment assistance is pretty much exactly what it sounds like. Employees with student debt pay their same monthly payment, but the employer pays an additional amount to help reduce the principle, cover interest, and shorten the length of the loan. The typical employer contribution is between $50 and $200 per month. Companies such as Gradifi, Tuition.io, and many more offer an easy way to implement this benefit when workers refinance through them. Another version of this benefit is for employers to contribute to a 401(k) for every dollar or the percentage of income used by the employee to pay their student loans.

Travel incentives can also take a few different forms. One way to incentivize travel is to set office or individual goals and provide a vacation reward of some sort once that goal is reached. A travel incentive could also come in the form of unlimited PTO or even minimum vacation policies. Another popular way to incentivize travel is with programs like Taab which allows employers to match or contribute to a worker’s savings for vacation. The average employer contribution for Taab is around $100 per month.
Who benefits from these benefits?
One of the most obvious differences between these two benefits is who actually benefits from them. In order to reap the benefits of student loan repayment assistance, a worker would need to have a student loan. With 44 million students who currently hold $1.5 trillion in debt, it would seem like this benefit could impact a great number of people. Millennials, the generation with the greatest ROI for this benefit, will make up over 75% of the workforce by the year 2025 and 70% of these workers graduated with debt.1 However, with a strong mix of generations currently at work, companies who have implemented these programs report that only 20% to 30% of their employees participate.2 To ensure that workers without loans are also benefiting, companies may choose to increase 401(k) contributions or offer tuition assistance for continuing education.

On the other hand, everyone can benefit from taking a vacation. Travel benefit programs such as Taab see an over 70% participation rate just months after the program is implemented. Every generation has their own reasons to travel. Baby boomers want to start checking off bucket list items that they've been putting off. Gen Xers mostly travel for family, with four in ten saying they will be taking a trip soon with multiple generations of family members.3 Millennials and those in Generation Z are traveling for romance, adventure, and to make a difference in the world. While each age of worker has their own motivations, it’s undeniable that 100% of workers can benefit from a travel incentive.
What do employees get from this benefit?
Student loan repayment assistance is more of a long-term benefit. Since employers are only supplementing loan payments, employees will still need to cover potentially high monthly payments. In the short-term, this doesn’t put more money in their pocket. However, over time, student loan repayment assistance can drastically reduce the length and size of a loan. Employers contributing just $100 per month to a student loan can potentially reduce the financial burden on their employees by $10,000 and speed up repayment by three years.4

Travel incentives, on the other hand, are both a short and long-term benefit. In the short-term, a vacation provides rest from workplace stress and can increase happiness and productivity both before and after the time off. Vacations can also increase creativity, encourage a broader worldview, and can lead to a feeling of personal fulfillment. In the long-term, vacations combat burnout which keeps employees happier, healthier, and around longer.
What do employers get from this benefit?
For an employee benefit to be truly beneficial, the company needs to see a clear ROI. For student loan repayment assistance, the ROI comes in the form of easier recruitment and better employee retention. A 2017 survey showed that 86% of people would commit to a company for five years or longer if they offered student loan repayment assistance.5 Eighty-seven percent of respondents in a separate survey said they would be swayed to stay at their current company if the benefit was offered.6 Loans also pose a financial burden on employees that can be distracting. Over 90% of managers believe loan repayment creates workplace stress and 70% say that removing these financial burdens would improve morale and retention for the business.7

Travel incentives have even more benefits for the company offering them. Employers will see increased productivity and reduced fatigue (burnout) from employees returning from vacation. The long-term wellness effects of traveling will promote better mental and physical health, reducing absenteeism and workplace drama. Travel incentives will also help with recruitment and retention. In one study, 96% of employees indicated they are strongly motivated by travel incentives and 72% who use this benefit say they feel increased loyalty to their company.8

In the end, only you can know what’s right for your company. While student loan repayment can greatly benefit millennials and generation Z workers, it doesn’t cover your entire workforce and can leave other employees asking where their benefits are. Travel incentives, on the other hand, will benefit 100% of workers on a physical, emotional, and even spiritual level. Encouraging travel and providing incentives will bring your company greater reward.