Unum’s Creative Student Debt Relief Program

A couple of weeks ago, I was chatting with Dylan Cleary, our sales representative from Unum.  He mentioned a new student debt relief program that Unum was launching soon, and the structure sounded pretty interesting.  I asked if I could speak to someone at their home office for details.

Dylan connected me with Carl Gagnon, Unum’s AVP of Global Financial Wellbeing.  He filled me in on how the program got started and how it’s being funded.

Unum commissioned an internal task force about 2.5 years ago to look at student debt.  The checked out some of the vendors offering programs such as Gradifi.  With their data bases, they estimated that Unum probably had 2500 employees of their 10,000 that had some level of student loan debt.  This turned out to be a fairly accurate estimate.

The problem was the funding.  If you have 2500 employees eligible for the plan, and typical plans pay $50 to $100 per month per employee, the dollars add up pretty quickly.  So Carl and Rob Hecker, the VP of Global Rewards and their team started to think outside the box.

Unum has a rich PTO/holiday program with 28 days offered in the first year of employment.  Employees are able to carry forward up to 40 hours of PTO/holiday time into the following year if they don’t use it all.  Carl’s team thought that this excess PTO time could be a source of funding.  It’s already on the books as an expense, so no new dollars would need to be allocated.  If they have PTO/holiday pay that can be carried forward into the next year, employees with student debt can choose to use those dollars instead to pay down their student loans.

Carl and his team spent a lot of time checking with the internal departments that would be impacted as well as the legal and tax ramifications of the program, but everything seemed to check out.  They decided to launch the program on January 1, 2020, which will give employees time to decide how best to use their PTO.

Here are a couple of other details:

  • Fidelity will handle the plan administration.
  • Loan payments will only be done once per year, making it a relatively simple plan to manage.
  • The dollars can only be used for student debt, not other kinds of debt.
  • Per IRS rules, payments will be taxable to the employees.
  • A parent or grandparent of a child in college can participate as long as he or she is signed or co-signed as the borrower.
  • Employees with student debt have a choice.  They can take the PTO or they can use it for student loans.

Carl says the initial feedback from employees has been “unbelievably positive.”  He said, “The whole purpose of the plan is to help our employees be better off financially and provide the importance of options and choice within our Global Rewards strategy.”

Dylan, not too far removed from college himself, is looking forward to the launch date in January.  “Lots of people in my age group have been talking about it,” he said.

I think Carl and his team have found a really creative way to help employees with college debt.  If you’d like to chat about creative employee benefits strategies, give us a all at (866) 724-0008 or click the link below.


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