In a new twist on a, online textbook rental company Chegg is offering its employees company stock to pay down their student loan debt.
The Santa Clara, California-based company said it has created an equity pool from existing stock to give its U.S. employees with student loan debt up to $5,000 in stock towards their payments. Employees are required to have been with the company for at least two years.
Chegg workers in entry-level and managerial positions are eligible for $5,000 yearly, while employees in senior positions, like a director or vice president, can receive up to $3,000 annually.
About 4% of all U.S. companies offer a student loan repayment benefit, according to the Society for Human Resource Management. However, companies typically offer an employer match towards monthly student loan payments, as in a 401(k). Jenny Brandemuehl, chief people officer at Chegg, said the company went with an equity-funded benefit to reduce the financial burden on its workers.
"A match is a nice idea, but we felt that that's more complex and it would require employees to put up a certain amount," Brandemuehl said.
"We have people in big cities, like the Bay Area and New York City, where the cost of living is so high, we didn't want them to have the prerequisite to contribute," she continued, adding that the average age of Chegg employees worldwide is about 32.
She also said that there is no cap on the benefit, while other company student loan repayment plans typically cap their contributions over a period of five to 10 years.
Interest in company-sponsoredhas grown as the national student loan debt load climbs past $1.5 trillion. For younger workers, student loan debt has , like saving for retirement or buying a home.
Companies including Fidelity and PricewaterhouseCoopers have launched their own student loan debt repayment programs, while tech startups like Tuition.io and Gradifi offer services to manage the benefit.
However, experts say the benefit is unlikely to take off until it becomes tax-advantaged for businesses to implement them for their own employees. A bill in Congress called the Employer Participation in Repayment Act would make employer-based student loan debt repayment of up to $5,250 per year tax-free. While the bill has broad support from both Democrats and Republicans, it's stuck in the Senate as part of a larger tax-law package that has yet to be introduced for a vote.
"These efforts should not be taxed as a benefit but should be incentivized because they will ultimately benefit the economy," Chegg CEO Dan Rosensweig said in a statement.