Pay Off Student Loans with Peanut Butter?
MM Note: Peanut Butter is for companies not for individuals. You should ask your company if they offer a student loan repayment benefit. If you own a company this is a great benefit you can offer your employees.
For those of you who read Millennial Money, you know I am always on the lookout for innovative start-ups making it easier to pay back student loans, make more money, save, and invest. When I heard about Peanut Butter – a Chicago based startup that helps companies offer student loan assistance as an employee benefit for Millennials, I had to reach out and learn more. This week I had the opportunity to connect with Peanut Butter Founder and CEO Dave Aronson about his vision for Peanut Butter and conquering student debt in the United States.
What is Peanut Butter?
Dave: “We make is easy for companies to help their employees get out from under student debt. Offering this benefit helps companies with recruiting and retention. The key with benefits is you want them to create engagement with your employees. At Peanut Butter we help companies customize their student loan assistance program. Our programs include resources for employees to learn effective strategies to pay off their student debt and administrative support so that employers can contribute toward the repayment of employee student loans.”
What gave you this idea Dave?
Dave: “I read a study about how few employees contribute to their 401ks and I realized that employees probably aren’t contributing to their 401ks because, like me, many of them are paying off their student loans. I had worked in HR outsourcing before, and realized that student loan assistance programs could be valuable, but were probably not something that most HR departments are staffed to handle.”
I really dig the name Peanut Butter – where did it come from?
Dave: “Peanut Butter was the only thing I could afford to eat when I was in college. In business school [Kellogg] I was taught to create a company name that aligns with company vision and is memorable. Peanut Butter is all about administering the benefits that employees will stick around for.”
What type of companies is Peanut Butter for?
Dave: “We work with companies of all sizes that want to recruit college-educated talent and keep those employees on board. In late 2015 Peanut Butter sponsored the Millennial Benefit Preferences Study. Among other things, the study found that college educated Millennials are willing to stay 36% longer in a job and are more likely to accept a job offer if student loan repayment is included as an employee benefit. The study is worth checking out if you’re thinking about how to attract and retain Millennials. In addition to the above, it also had some interesting findings about how this student loan repayment can support employer efforts to create gender and cultural diversity in the workplace.”
How does it work and what is the cost range for companies that want to sign up?
Dave: “We have two levels of service. The first is providing access to information that help employees learn strategies for how to pay back their student loans and help them answer questions like when it does or doesn’t make sense to refinance their loans. One study found that 70% of student loan holders don’t know how to find out if they can pay less. By giving employees the resources they need to succeed, employers can see better engagement in the workplace and lower costs related to employee retention and missing work. These resources are includes in our full offering where we administer company-sponsored student loan contributions. Typically student loan employee benefit plans contribute $50-$500 per month to their employee student loans. All of our plans are customized to help employers efficiently and effectively allocate their benefit dollars. Student loan assistance programs can be initiated anytime during the year and we can help many employers get up and running quickly. At Peanut Butter we charge a simple $5/per participant per month fee for this service.”
Can I as an employee match the contribution pre-tax or is there currently some hack where I get student loan repayment as a pre-tax benefit?
Dave: “Right now student loan repayment is a taxable benefit which kind of makes it easier for employers to offer – since they don’t have the restrictions of a 401k or 403b. I personally think it should be a tax advantaged benefit and we are working with Congressmen and Senators to try to advance legislation. In May, we partnered with Congressman Dold as he introduced the Help for Students and Parents Act to the U.S. House of Representatives. The bill has bi-partisan support is currently being reviewed by the House Ways and Means committee. If passed into law, it will allow companies to make pre-tax contributions toward employee student loans – a win for employers, a win for employees. And also a win for the federal government as it would help reduce the default risk on the $1.2T federal student loan portfolio. I’m hopeful that student debt will be debated early in the next Congress and that legislation like this one will be enacted into law.”
To learn more about Peanut Butter check out their infographic below.