In 2018, 768 million vacation days were unused, with more than 236 million days lost entirely, representing $65.6 billion in lost benefits. The remaining 532 million vacation days have remained on the company’s books as a liability, which continues to grow as employees earn more PTO time than they can use. The result is that employers owe their workforce the value these days, but often cannot afford those funds through a traditional PTO program. The average amount owed to employees is $1,898 per employee, or up to $12,000 per worker in some companies.
Converting the value of current PTO days into student loan repayments is a winning proposition for employers and employees. Employees benefit from having access to money now to pay off student loan debt, while employers build engagement as they improve their bottom line. A program allows employees to convert the value of unused PTO days into student loan repayments amounting to several thousand dollars a year. Employers will want to make sure that employees still take time to maintain a work-life balance while complying with state PTO conversion laws. Additionally, some employers are now capping PTO hours and balancing the administrative burden of adding new benefit programs. However, the benefits are substantial, with 68% of employees saying they would consider not leaving their employer if they had access to student loan benefits. By offering these programs, employers reduce recruitment costs, increase retention and improve employee engagement.
Similarly, companies like Abbott Labs have allowed employees to repay student loans through their 401(k) program, providing matching amounts to the employer. However, a downside to the employee is that since they are paying off their debt, they are missing out on the compound interest they would receive by contributing to a 401(k) investment.