Some companies are introducing a new approach to help employees tackle their student loans: exchanging unused paid time off (PTO) for cash. This shift reflects changing workplace benefits and the increasing financial pressure felt by millions of American workers who are juggling student debt.
Why It Matters?
Over 40 million Americans currently have federal student loans, with more than 10% believed to be in default. The recent end of the pandemic-era pause on federal student loan payments has already triggered an increase in loan delinquencies, defaults, and credit score drops.
The Department of Education (ED) has warned that millions of borrowers could face wage garnishment unless Congress or regulatory bodies intervene further.
As loan payments resume, many borrowers are feeling the weight of their debt, and companies are stepping in with new ways to help ease this burden.
What To Know?
In response to the return of student loan payments, some employers are offering creative solutions to help their workers. One of the emerging trends is allowing employees to convert unused PTO into cash, which can be used to pay off student loans.
Goldman Sachs Ayco, a wealth services branch of Goldman Sachs, has seen growing interest in such PTO exchange programs. According to a recent report from Fortune, more than 25% of their 400+ corporate partners now offer employees the option to use their PTO for student loan payments, up from 21% in 2021.
Maegan Wells, vice president and corporate benefit specialist at Goldman Sachs Ayco, explains that this trend is part of a broader push toward more flexible workplace benefits.
“The overall trend we’re seeing now in the benefit and compensation space is finding flexibility, and that includes how employees use their PTO,” Wells said.
Jonathan Barber, head of compensation and benefits policy research at Goldman Sachs Ayco, also pointed out that these programs can be a cost-effective solution for companies, as PTO is already part of the company’s budget.
However, he noted that managing these programs can be complicated due to state laws, such as in California, where vacation time cannot be arbitrarily converted or forfeited.
What People Are Saying?
While some see this as a positive trend, others have mixed feelings about it.
Jonathan Barber emphasized that while most companies want their employees to take time off, many workers do not utilize their PTO. “For better or for worse, not everyone is going to take the time, whether they’re given it or not,” he said.
However, HR consultant Bryan Driscoll, speaking to Newsweek, warned against this practice. “Tying student loan repayment to forfeiting PTO is a trade-off no worker should have to make.
It’s happening because companies want to look generous without actually being generous. They’re not increasing total compensation and benefits. They’re simply repackaging it to save face in a tight labor market.”
Alex Beene, a financial literacy instructor, also voiced concerns, explaining that these programs might encourage employees to give up necessary time off for the sake of paying down student loans. “
While it’s probably not the best policy to push employees not to use PTO time, the allure of having student loan payments reimbursed is a hard one for many to turn down,” Beene said.
What Happens Next?
As more workers face the risk of wage garnishment and damaged credit due to unpaid student loans, more may turn to employer-backed solutions like PTO cash-outs for financial relief.
However, there are concerns about the potential negative impact on employees’ well-being.
Bryan Driscoll warns that while the idea may sound appealing, it ultimately pressures employees to sacrifice their mental health in exchange for a false sense of financial progress. “PTO isn’t a perk—it’s essential for mental health and burnout prevention,” Driscoll stated.
“When companies make workers choose between paying down debt or taking time off, they’re exploiting financial desperation.”
As companies continue to compete for talent, PTO-for-loans programs may become a more common offering, provided that the legal and logistical aspects are ironed out.
“The worthiness of this hinges on how much their student loan payments are and if foregoing PTO is a smart decision from a personal standpoint,” Beene added. “Still, it’s a fascinating development in the tackling of multiple professional problems.”