Chegg has unveiled a fresh strategy to assist its workforce in managing their student loan obligations.
The CEO is urging other businesses to emulate Chegg's approach.
The educational platform, known for its connection with students, introduced a new initiative on Thursday. It will offer entry- to manager-level employees up to $5,000 annually if they've been with the company for at least two years. Directors or vice presidents can receive up to $3,000 per year to alleviate their student debt.
"Corporations must step up," declared Chegg CEO Dan Rosensweig during an interview with CNBC's "Closing Bell" on Thursday.
"We benefit from individuals who have pursued education—be it a four-year degree, a two-year program, or even those who haven't completed it," he emphasized. "If they've borrowed money and are contributing value to us, we aim to assist them."
Student loan debt has reached unprecedented levels, with borrowers collectively owing $1.5 trillion. Approximately 7 out of 10 college graduates carry educational debt.
Many struggle to meet their financial obligations, with over 1 million borrowers defaulting each year. By 2023, it's anticipated that 40% of borrowers could default on their student loans.
In addition to the $1,000 cash benefit already provided annually to employees with student debt, Chegg's latest program, Equity for Education, has been introduced. To fund this initiative, Chegg established an equity pool using its existing stock.
"We're grappling with a significant issue, arguably the largest economic crisis facing the nation. Yet, we aren't addressing it adequately," Rosensweig remarked.
The Santa Clara-based company isn't alone in its efforts to aid employees with student loan debt.
Last year, Fidelity initiated a program called Student Debt Employer Contribution, enabling companies to contribute to their employees' educational debt. Over 65 companies have since adopted or are in the process of adopting this benefit.
"A growing number of companies recognize that helping employees address student debt can enhance their overall financial well-being, which can have positive business implications in various ways," explained Asha Srikantiah, head of Fidelity's Student Debt Employer Contribution program.
Fidelity has observed a marked improvement in attracting and retaining top talent since introducing the program to its own employees in 2016.
"Between 2016 and 2018, eligible Fidelity employees experienced an approximate 75% reduction in turnover in the first year of program participation," Srikantiah revealed. "According to a recent internal survey, it's among the top two reasons people choose to join Fidelity."
However, companies offering such benefits remain a minority, accounting for about 4% in 2018, according to the Society for Human Resource Management.
Chegg's CEO emphasized that his company meticulously considered how to develop a program that other businesses could replicate.
"We aimed to set an example and foster dialogue," Rosensweig asserted.
He also hopes that government and academic institutions will take note of Chegg's initiative and contribute to addressing the crisis.
"We're placing a disproportionate burden on our most vulnerable and financially unstable individuals, which is unsustainable," Rosensweig concluded.
