In 2018, 768 million vacation days went unused, with over 236 million days entirely forfeited, amounting to $65.6 billion in lost benefits. The remaining 532 million vacation days stayed on company 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 of those days but often cannot pay those funds under a traditional PTO program. The average amount owed to employees is $1,898 per employee, or as much as $12,000 per worker in some companies.
Converting the value of outstanding PTO days to student loan payments is a winning proposition for both employers and employees. Employees benefit by accessing money now to pay down student loan debt, while employers enhance engagement as they improve their bottom line. One program allows employees to convert the value of unused PTO days into student loan payments that amount to several thousand dollars per year. Employers will want to ensure that employees still take time off to maintain a work-life balance while being compliant with state PTO conversion laws. In addition, some employers now put a cap on PTO hours and balance the administrative burden of adding new benefit programs. However, the benefits are substantial, with 68% of employees reporting that they would consider not leaving their employer if they had access to student loan benefits. By offering these programs, employers reduce recruiting costs, increase retention, and improve employee engagement.
Similarly, companies like Abbott Labs have allowed employees to pay off student loans under their 401(k) program, providing employer-matching amounts. However, one downside for the employee is that since they are paying off debt, they miss out on the compound interest they would receive by contributing to a 401(k) investment.