By: Roberta Chinsky Matuson
Student loan debt can crush college hires.
College seniors who graduated in 2011 owed an average of about $27,200 in student loan debt, according to Mark Kantrowitz, Vice President of Advanced Projects for Monster. Add in loans from parents and the amount owed rises to $34,400.
As a result, college students are increasingly stressed about their first job, which can impact the recruitment of much-needed new hires.
“This may lead to college graduates choosing jobs that pay better over jobs that are a better fit for their career aspirations,” says Kantrowitz.
A Response to Student Loan Debt
The news about college hires and student tuition debt is particularly troublesome for those trying to fill positions in industries like healthcare hiring as well as with IT hiring for HITECH, where demand continues to outpace supply.
In the public sector, some hospitals and schools are tapping government-sponsored tuition forgiveness programs to assist new hires. For example, teachers who qualify can reduce their student loan debt through the Teacher Loan Forgiveness Program; other public occupations might qualify for Public Service Loan Forgiveness.
“If you want to attract talented college graduates to your organization, then you have to appeal to what motivates them as job seekers,” states Kantrowitz.
Tuition Forgiveness Programs
Judy Fix, RN, MSN, Chief Nursing Officer and Senior Vice President at Long Beach Memorial Medical Center and Miller Children's Hospital Long Beach, knows the challenge of recruiting college hires into hard-to-fill positions first-hand.
Under Fix’s leadership, the organization partnered with California State University Long Beach to increase the number of qualified nursing candidates. In exchange for a two-year work commitment, participants in their program receive reimbursement or direct tuition payment, based on the California State University or University of California tuition rates.
“Students enrolled in our program are given a stipend that allows them to cover costs associated with their schooling,” says Fix. Students from private institutions can apply as well.
Fix notes that the rates set for forgiveness are based on California State University or University of California tuition rates. The medical center informs participants in advance that the IRS will see the stipend as income, which could affect any other loans or grants they might be eligible to receive.
“Since its inception, we have brought in 600 registered nurses through the program. We’ve been able to recruit the best and the brightest,” states Fix. “The Tuition Forgiveness program has made a tremendous difference in the stability of our staff and the quality of our hires.”
Tuition Loan Forgiveness via a Signing Bonus
Sarah Cullins, President of Rancho Cucamonga, California based Finesse Staffing, finds the idea of tuition forgiveness programs intriguing.
“Recruiting qualified IT people who are exactly what you are looking for is challenging. For companies who are looking far into the future and planning ahead, this is a great way to secure talent before someone snaps up the fresh grads.”
For employers who need new hires now, this solution won’t necessarily work -- unless employers provide signing bonuses as part of their tuition forgiveness bonuses.
“All other things being equal, anything extra you can do for your current and future employees will build loyalty. If you invest in them now, they will be more apt to stay in the long run,” notes Cullins.
She believes forgiveness for college hires is the perfect way for forward-thinking companies to differentiate themselves from the pack when recruiting college hires.
Retaining New Hires
Some employers might worry about the fickle nature of younger hires. What if they decide to leave before they have worked off their commitment?
“We have a strong relationship with our participants and a good track record for getting reimbursed,” states Fix. Re-payment is pro-rated if someone leaves before fulfilling his or her two-year obligations.
“We make arrangements for payments if a student doesn’t fulfill their end of the bargain.” The medical center also provides nurses with a healthy bump in their nursing salary at the end of the two-year period to encourage workers to continue their employment.
Kantrowitz sees tuition forgiveness programs as a great way to keep payroll costs to a minimum.
“It’s not a long-term cost, because at the end of the agreed upon time period, you are not adding more money to your payroll, year after year.”
He adds, “These types of programs are a great solution for the mismatch between the job skills of seekers and the needs of available positions. Loan forgiveness programs can encourage people to pursue the necessary training.”
At the end of the day, tuition forgiveness programs provide better trained employees who feel a connection to the organization.
Then again, what college graduate wouldn’t be attracted to a firm that invests in their people?
© 2012 Human Resource Solutions. All rights reserved.
Author Bio:
Roberta Chinsky Matuson is the President of Human Resource Solutions and author of the highly acclaimed book Suddenly in Charge: Managing Up, Managing Down, Succeeding All Around, a Washington Post 2011 Top-5 Leadership pick. Sign up to receive a complimentary subscription to Roberta's monthly newsletter, HR Matters.