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Forma Research: Student loan repayment employer benefit cost-of-living guidelines

Understand how to offer equitable student loan assistance and factor in cost-of-living adjustment best practices for your workforce.

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The importance of a student loan employer benefit

Offering a student loan employer benefit can be a valuable addition to a company's employee benefits package, as it can help to attract and retain top talent who may be struggling with high levels of student debt. Student loan debt is a common financial burden for many workers, and the ability to receive assistance with repayment can be a major deciding factor when it comes to choosing a job. Additionally, by helping employees pay off their student loans, a company can improve their financial wellness and overall job satisfaction, leading to increased productivity and reduced turnover. In an increasingly competitive job market, offering student loan benefits can give a company a competitive edge and help set it apart from other employers.

Factoring cost-of-living adjustments (COLA) for student loan employer benefit

When offering a student loan employer benefit program in different countries, it is important to factor cost-of-living adjustment (COLA) to ensure that the benefits are equitable and fair for all employees. Educational expenses such as college tuition fees can vary significantly. For example, college tuition fees in the United States are generally higher than in many other countries.

Forma offers assistance to employers implementing and maintaining a COLA for student loan employer benefit program. This way, you can focus on running your business while ensuring that employees receive the support they need to pay off their student debt. In this blog, we've outlined our guidelines for those looking to factor COLA in their student loan employer benefit program.

COLA guidelines for student loan employer benefit

Since the nature of the student loan program is relatively simple, we’ll apply a “Basket of goods” method1. The essence of this method is first to select a handful of items or a “basket of goods” that you expect employees will want to purchase with LSA funds. Then, use the information to estimate how much funding is needed to cover the cost of the eligible LSA expenses by country.
> Learn more about Forma Research's COLA guidelines here.

To start, we’ll need to define a proper basket of goods. In this case, a basket that can represent the measurement of student loans. So the critical question here is actually “How much does a student spend on higher education? OECD’s research “Education at a Glance” provides a great investigation of educational expenditures. It provides how much a single student at each level spent on education in different countries2. We’ll apply the data directly to represent the baskets.

> See Appendix A for more details on how we filter the data.

Unfortunately, not all countries are covered by OECD’s research. For these countries, we target the college tuition fee as the baskets by manually looking into the official data sources in each country or other reliable reports. After retrieving these data, we are able to compare the amounts in the baskets and get the adjusted conversion rates. In the next section, you’ll see Forma’s results on this.

With the method mentioned above, we’re able to compile adjusted conversion rates.

The table above details:

  • The most common countries
  • The basket amount
  • The adjusted conversion rate (compared to US dollars)
  • The currency conversion rate (compared to US dollars)

We compared each amount to the amount for the U.S. as a quick way to convert the benefit amounts offered among countries. For example, if you’re offering U.S. employees a yearly $2,000 student loan. After the cost-of-living adjustment, you should offer your Australian employees $2,000 x 0.83 = 1,660$ AUD per year.

As a comparison, we also list the nominal conversion rate in the fourth column. You can see the importance of COLA from the differences between the nominal rate and the adjusted rate.

For OECD countries, the data comes from the OECD report. For the rest of the countries, please see the Reference section below for data sources.

Some additional guidelines and recommendations include:

  • To ensure fairness and equity, we suggest providing European employees with the same stipend as other European countries. As it is common for European students to study in other European countries.
  • The listed amount represents the average for the entire country. The basket of goods method considers expected expenses under the program. However, this amount may vary based on your employees' demographics and backgrounds. For instance, if most of your employees have graduate degrees, you may need to adjust the stipend amount even higher.
  • The research data consists of lagging indicators, so it may not always be the source of truth. Factors such as sudden inflation or currency devaluation could affect the actual situation. In these circumstances, we may need to make further adjustments.

Get help with student loan employer benefits COLA

Taking the steps covered can be incredibly helpful. For more information about student loan repayment employee benefits, <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">schedule a consultation</span> with one of our experts. We’d be happy to help you find the perfect solution for your unique needs.

About Forma Research

Forma Research provides benchmark reports, best practices guides, data tools, and other resources to help HR professionals and brokers expand their understanding to become experts on flexible benefits and Lifestyle Spending Accounts (LSAs).


The information presented in this article is intended for informational purposes only. Forma has the right to the final explanation of the data mentioned in this article. The accuracy of the data can be impacted by various factors, including but not limited to the current economic environment in each country, inflation, and nominal currency conversion rate changes. While the referenced data is believed to be accurate, Forma is not responsible for any incorrectness or incompleteness of the data, and readers are advised to also apply their own discretion and judgment before making any decisions based on the information provided in this article.

Appendix A

OECD’s research “Education at a glance” provides a great investigation of educational expenditures. The Educational finance indicators [3] were applied in this publication and provide us a great insight. Here is how Forma retrieves the educational expenditures in OECD countries from the indicators:

We set the data filters to the following:

  • Indicators: FIN_PERSTUD_DEF_PPP: Total expenditure on educational institutions per full-time equivalent student - constant prices and constant PPP (2015)
  • Year: 2019 (the latest)
  • Expenditure Type: All expenditure Type
  • Unit measure: Local Currency - 2015 Constant prices

We targeted the “Total territory expenditure”. This includes the following four levels of education (ISCED 2011 Operational Manual: Guidelines for Classifying National Education Programmes and Related Qualifications, pp.13):

  • ISCED 2011 level 5 Short-cycle tertiary education
  • ISCED 2011 level 6: Bachelor’s or equivalent level
  • ISCED 2011 level 7: Master’s or equivalent level
  • ISCED 2011 level 8: Doctoral or equivalent level

Reference materials

[1] Forma Research Guidelines for LSA Program Cost-of-Living Adjustments

[2] Education at a Glance 2022: OECD Indicators, OECD Publishing, Paris

[3] OECD (2023): Education at a glance: Educational finance indicators (database)

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