Google plans to help its employees pay off their student loans faster. That’s great for Google employees, but it could also have a ripple effect on the tech industry as a whole, which has copied various advantages from Google over the years to better compete with talent.
“Today we are launching a student loan repayment program for all Googlers in the United States,” read the new note on Google’s corporate blog. “Starting in 2021, Google will pay up to $ 2,500 per Googler per year in student loan payments to help them pay off their student loans faster, saving them money to use for other purposes. whether it’s buying 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 company to offer some sort of rebate benefit. Nvidia, for example, allows its employees to request repayment of a loan (up to $ 6,000 each year). Google is a particularly noteworthy company to watch for benefits, as other companies sometimes follow suit. For Silicon Valley titans like Facebook, replicating a rival’s policies is often the cost of doing business (and hiring from the same pool of highly skilled technologists); for small businesses across the country, offering a similar advantage to Google can help attract top talent.
This is also a benefit that technologists really want; this year Dice salary report revealed that around 48% of them are interested in reimbursing tuition fees, roughly on the same level as maternity / paternity leave (45%) and paid vacation (44%) and well before the ‘401 (k) pairing (30%). However, only 25 percent of employers said they offered such a rebate.
Why is such a reimbursement not more popular among employers? Taxes may have something to do with it: Right now, these payments aren’t deductible, which means they could quickly become an expensive perk, especially for low-margin businesses. (Employees would also have to pay taxes on aid, which would be treated as income, but that’s another story.)
Congress considered whether to help employers help employees with their student loans. Last year, U.S. Representative Scott Peters (D-CA) introduced HR 1043, the Employers’ Participation in Repayment Act, which provides tax benefits to employers who help employees repay their student loans; US Senator Mark Warner (D-VA) presented a similar bill in the Senate the same year. But none of these bills have made legislative progress since then.
For a mega-business with deep pockets like Google, starting such a reimbursement program is less of a financial problem. The big question is whether more tech companies will commit to offering something similar; it could depend entirely on Congress and tax breaks.