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An excellent benefits package can help hospitals and healthcare employers attract and retain the highly skilled and dedicated staff they need. This means offering benefits that not only meet employees’ needs but also help them overcome barriers and thrive.

While benefits like excellent healthcare and generous time off are vital, a student loan repayment benefit can be especially valuable to healthcare employees. Due to high education costs, student loan debt is a major problem among medical professionals. 84% of medical students and 90% of other health sciences students graduate with student loan debt. The average physician in the U.S. has $200,000 in debt. The median student loan debt for nurses without advanced degrees is around $50,000.

Let’s explore what a student loan repayment benefit looks like, what healthcare employers should consider when implementing it, and how repayment assistance differs from forgiveness.

What is student loan repayment assistance?

Student loan repayment assistance refers to several benefits an employer may offer to ease employees’ student loan burdens.

Employers can make direct contributions toward repaying student loan debt. They might also offer employees flexible funds that can be directed toward several benefits, including student loan repayment.

Student loan repayment employee benefit options

Hospitals and other healthcare employers can choose to provide a benefit for student loan repayment assistance in a few different ways, including direct repayment and discretionary repayment.

Direct repayment

With direct repayment, the hospital or employer sends the repayment contribution to the employee’s student loan servicer. Employees can elect to receive the contribution until they reach the lifetime cap.

Direct payments can be structured differently. Employers may choose to set up recurring payments, matching payments, or even a lump sum (such as a signing bonus).

Discretionary repayment

Another option is to allow employees to use discretionary benefit funds to pay their student loans. With this model, the employer provides discretionary funds, which employees can put toward several benefits, such as an HSA, 401(k), or student loans.

Other types of repayment

There are many other ways to implement a student loan benefit. For example, healthcare employers may offer matching 401(k) contributions when an employee directs part of their check toward student loan payments. Some employers allow employees to trade unused PTO for student loan repayment.

Considerations for providing student loan repayment assistance

Some variables to consider when offering student loan repayment assistance:

Eligibility
Contribution amount
Lifetime cap

Eligibility

Who is eligible to receive this benefit? Healthcare employers may choose to provide student loan repayment assistance to all employees or only full-time workers.

Employees may also have to meet the individual criteria for being “benefits-eligible,” including being employed for a specified period, such as six months, or having graduated within a certain timeframe, such as the last 10 years.

Contribution amount

To determine how much to contribute, healthcare employers should consider the average monthly debt payment employees may owe and the hospital’s budget. Employers may also elect to pay different contribution amounts to full-time and part-time employees.

Lifetime cap

Healthcare employers could also limit how much they’ll contribute to a student loan repayment during an employee’s tenure. This cap may vary depending on contribution amount and employee eligibility.

Student loan repayment benefits vs. student loan forgiveness programs

While student loan repayment benefits and student loan forgiveness programs can both alleviate financial stress, they work differently.

Student loan repayment assistance benefits go directly toward making debt payments, which can lower the monthly expense of student loans.

On the other hand, student loan forgiveness programs eliminate all or part of the debt that needs to be repaid after a set period of qualifying repayments. The debt is forgiven in a lump sum. Forgiveness programs have different criteria than student loan repayment benefits, and different tax implications.

Other ways to help healthcare employees manage student loan debt

Student loan repayment assistance isn’t the only way employers can help employees manage student loan debt. Some other options include providing access to budgeting tools, healthcare-specific student loan solutions, workshops on accessing federal loan forgiveness programs, and tuition assistance for employees furthering their education.

Healthcare employers could also collaborate with educational assistance benefits platforms to offer student loan guidance and additional information on student loan forgiveness programs.

Access to these tools can not only help healthcare employers retain the best talent, but can also ease employees’ financial strain, reduce their stress, and help them focus more on performing at their best.

Learn more about student loan forgiveness for healthcare workers

Student loan debt can be challenging to manage at times, but there are resources that can make the repayment process easier. Healthcare employees who need help managing their student loan debt can find guidance through a student loan consultation specifically tailored to their needs as healthcare workers.

Dedicated Solutions for Healthcare Employers

Looking to support your team with employee student loan benefits? KeyBank partners directly with healthcare employers to provide exclusive student loan options, including student loan forgiveness guidance, refinancing rate discounts, and educational tools for financial wellness. Employers can also design an optional paid-contribution plan to help pay down employees’ loans faster. Learn how our team helps create a dedicated program for healthcare employees, learn more here.

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