'Gradifi': Student loan repayment offered as part of benefits package

Posted at 7:55 AM, Oct 18, 2017
and last updated 2017-10-18 12:13:46-04

KANSAS CITY, Mo. – There's a new benefit that could help you pay back student loans up to 25 percent faster.

Gradifi currently works with more than 200 companies to set up a benefits package that include a monthly amount just for student loans. Gradifi’s Founder Tim DeMello said he first got the idea when he realized the size of the problem.

According to the Federal Reserve Bank of New York, student loan debt exceeds both credit card debt and auto loan debt in the United States.

“What student loan debt is really doing is, its delaying life. The purchase of a car, the purchase of a home, the starting of a family... A lot of these things sort of get pushed out,” DeMello said.

Millennials will make up 50 percent of the workforce by 2020, and 75 percent of them have student loans.

“It became apparent that we could create a program for employers -- a student loan payback plan as a new benefit, which would both attract and retain employees," said DeMello.

Gradifi runs the whole program for the employer.

“We have a technology platform that the employer can register on and then we manage everything on behalf of their employees,” said DeMello.

If a company decides to offer this, DeMello said they must decide two things. The first is deciding which employees are eligible to qualify. The second is how much the employer is willing to contribute monthly.

“We have some companies that will do a program that offers 100 dollars for 72 months, some companies offer 400 dollars a month, we even have some companies sign up for a lifetime payment of $200 a month,” DeMello said.

Now, they are working on incremental programs as an incentive to keep employees around. For example, for the first year, the employer might offer $100 a month, then increase it to $125 the next year, and so on.

“So the employee knows, if I stay, I'm going to get the full $10,000 benefit, which is probably $12,000 with the prepaid interest benefit," DeMello said. “But if they left after four months, they only secured $400 of the benefit.”

But don’t worry. If you decide you want to leave your employer, you don’t have to pay back anything.

“It's a direct contribution by the employer, no matching at all,” DeMello said. “So as long as you stay at that company, they will continue to make these contributions through the Gradifi platform, directly into your student loan account."

Right now, the amount is added to the paycheck as income, but that could soon change.

“There's a tax bill right now in congress that would make this very similar to tuition reimbursement, where it would not be taxable,” DeMello said.

To learn more about Gradifi and what they offer both employers and employees, click here.