Should my student loan assistance program have a clawback provision?

Clawback provisions are common with tuition reimbursement, so this question comes up a lot. Because of some key differences in how we administer student loan repayment, there is usually not a need to have this type of provision attached to your program.

Employer contributions toward existing student debt are paid monthly. Because the payments are spread out over time, the company is naturally de-risked in the event an employee decides to depart. Take the following example – an employee enrolls in your student loan repayment program and you contribute $100 per month. Six months later, that employee leaves. The company has contributed $600 in total, hardly worth trying to recoup when you consider legal and administrative fees.

Student loan repayment is also fundamentally different than tuition reimbursement. When an employer provides tuition reimbursement, they are doing so to help that employee skill-up, and presumably have a bigger impact within their organization. It makes sense that, in this situation, the employer wants to protect their investment by implementing a clawback provision. Student loan repayment is more of a financial wellness initiative, helping the employee pay down the existing debt that likely helped them land the job they are currently in.

Have other questions about student loan assistance as an employee benefit? Schedule time with our client services team today.