Google plans on helping its employees pay off their student loans at a faster rate. That’s great for Google employees, but it could also have a ripple effect on the tech industry at large, which has copied various Google benefits throughout the years in order to better compete for talent.
“Today, we’re introducing a student loan repayment program for all Googlers in the U.S.,” read the new note on Google’s corporate blog. “Starting in 2021, Google will match up to $2,500 per Googler per year in student loan payments to help them pay off their student loans faster, allowing them to save money to use in other ways, whether it’s purchasing a new home, starting a family, or investing in a 401(k). We plan to expand the program globally over time.”
Google isn’t the only tech firm that offers some kind of repayment benefit. Nvidia, for example, allows its employees to apply for loan reimbursement (up to $6,000 each year). Google is a particularly notable company to watch when it comes to benefits, though, because other companies sometimes follow its lead. For Silicon Valley titans such as Facebook, replicating a rival’s policies is often the cost of doing business (and hiring from the same pool of highly-skilled technologists); for smaller firms all over the country, offering a Google-like benefit can help attract top talent.
This is also a benefit that technologists really want; this year’s Dice Salary Report revealed that some 48 percent of them are interested in college tuition reimbursement, roughly on par with maternity/paternity leave (45 percent) and paid vacation (44 percent) and well ahead of 401(k) matching (30 percent). However, only 25 percent of employers said that they offered such a reimbursement benefit.
Why isn’t such reimbursement more popular among employers? Taxes might have something to do with it: Right now, such payments aren’t deductible, meaning it could quickly become an expensive benefit, especially for businesses with slim margins. (Employees would also have to pay taxes on the assistance, which would be treated as income, but that’s another story.)
Congress has been examining whether to help employers help employees with their student loans. Last year, U.S. Representative Scott Peters (D-CA) introduced H.R. 1043, the Employer Participation in Repayment Act, which offers tax benefits to employers that assist employees in paying off student loans; U.S. Senator Mark Warner (D-VA) introduced a similar bill in the Senate the same year. But neither of those bills have made legislative headway since then.
For a deep-pocketed mega-firm like Google, it’s less of a financial issue to launch such a repayment program. The big question is whether more tech firms will step up to offer something similar; it might hinge entirely on Congress and tax breaks.