The Loop

Convert Unused PTO Into Student Loan Benefit

Filed under: Benefits

This year, there are two reasons why workers are less likely to use their paid-time-off (PTO). The first is pandemic related; many people are working from home which allows them to pace themselves. They can take more breaks, lie down for a power nap, and intermix household chores with job duties. In other words, working from home can lead to better work-life balance and therefore less stress. As a result, people may feel less need to take days off work to recharge.

The second reason is also COVID-related: Americans have far fewer places they can go on vacation. When traveling domestically, they are subject to local rules and mandates regarding facemasks, social distancing, and reduced capacity for entertainment and dining venues. Some popular tourist spots may be closed altogether. For those inclined to travel out-of-country, American vacationers currently face strict quarantine mandates or are banned from all but a handful of countries largely located in the Caribbean (during hurricane season), Eastern Europe, and Africa. Suffice it to say that many American workers will likely have unused PTO by the end of the year.

This presents an opportunity for employers to provide a value-added benefit at no extra cost. After all, since PTO is already accruing and accounted for in the company budget, there are ways to convert that expense into another benefit without adding to the bottom line.

Student Loan Assistance

Some employers have already established a program in which workers may convert the cash value of unused PTO toward student loan payments. Instead of leaving PTO days on the table, workers can request that their employer instead make a contribution toward their student loan debt. Here are some examples:

  • Montefiore St. Luke’s Cornwall Hospital in Hudson Valley, New York permits its 1,500 non-union workers to convert 30 to 75 hours of unused PTO into a payment against student debt, with a maximum $5,000 annual contribution. In the first year, more than 50 workers participated in the program, resulting in a combined total of $90,000 contributed toward their student loans.
  • Unum allows workers to convert eight to 40 hours of unused PTO toward paying off student loans for themselves, a spouse, or a child – as long as the worker is the signatory or co-signer of the loan. To date, Unum has paid $528,000 in student debt on behalf of the 428 workers who have signed up for the program.

Developing a PTO conversion program is likely to involve several different departments, such as human resources, payroll, finance, legal, taxation, and corporate communications. It also may require working with an external vendor as record keeper and administrator to make direct payments to student loan servicers.


Even before the pandemic, American workers forfeited an estimated 212 million vacation days a year, representing about $62.2 billion in lost benefits. Not having the option to convert that benefit into something meaningful for workers can lead to resentment, impacting both workforce morale and productivity. However, enabling workers to convert lost PTO into a constructive benefit can have the reverse effect: appreciation and incentive to work harder.

Student Loan Debt

PTO conversion also helps address a huge national problem. Over the past 10 years, student loan debt has tripled, with an average loan balance of $33,332. That kind of financial burden can seriously imperil a worker’s long-term ability to build wealth and home equity. On a larger scale, it speaks to generations of young adults contributing less to America’s economy, which could encumber growth prospects for decades to come.


Studies show that rising debt hurts not only a worker’s financial planning, but also can cause stress, anxiety, and impact overall well-being. While the CARES Act and more recent executive action permits delays in student loan payments, this only adds to worker stress knowing that they will be paying down this debt for even longer. PTO-conversion not only relieves the frustration of lost vacation pay, but also helps a worker’s debt load become more manageable. Particularly for 2020, employers that convert PTO into student loan payments can offset the potential for longer loan terms due to delayed payments this year.

Recruitment & Retention

PTO conversion programs offer a powerful tool for attracting and retaining talent. This is especially true in positions where the demands of the job make it difficult to use all of a worker’s accrued vacation time. This is a sore spot for many workers – what good is a benefit you can’t use? By providing a way to convert that PTO into a financial wellness benefit, employers can directly improve workers’ lives and create a more loyal and productive workforce.

Scheduling Conflicts

A common phenomenon is that workers who don’t take vacation throughout the year often rush to take it at the end of the year. This creates a disruption in scheduling as a large portion of the workforce requests time off at the same time. In many cases, either productivity decreases or workers become resentful that their request is denied – or both. A conversion program would enable many workers to reallocate what would otherwise be lost income, making them less likely to request year-end PTO and/or feel less resentful if it is denied.

Lifelong Learning

While converting PTO income into student loan assistance largely benefits young adults, older workers also may benefit. Many parents have taken out loans to pay for their children's college education and hold significant student loan debt. Furthermore, the program offers a strong incentive for advanced managerial candidates to seek a master’s degree, or for mid-career workers to go back to school to boost their own employment prospects.


It’s important to recognize that as much as work participation benefits productivity, the reason paid-time-off is so important is to help prevent worker burnout. For this reason, many companies limit how much PTO a worker can convert to income, student loan assistance, or other benefits. In fact, some companies mandate that workers use at least some portion of accrued vacation time each year to prevent problems that arise from burnout. When it comes to benefit-conversion programs, it’s important that employers do not incentivize workers to not use their PTO.


While student loan repayment assistance can benefit a wide swathe of America’s workforce, it doesn’t meet the needs of all workers. This presents the problem of benefit dollars being used to aid some workers at the expense of others. Employers looking to develop a PTO-conversion program may want to consider how unused PTO could be converted for workers who don’t have student loans.

In 2019, the Consumer Financial Protection Bureau (CFPB) introduced a policy that permits testing new financial products or services in areas of regulatory uncertainty, in an effort to encourage innovation. Recent innovations in employer financial wellness benefits include:

  • Vacation buy-back policy that allows workers to sell vacation time back to the employer and deploy that money however they see fit.
  • Employers setting up an automatic savings program for workers that directs a portion of their paycheck to a bank account.
  • Employer-assisted housing benefits, such as down payment assistance, mortgage payment assistance, shared equity, mortgage guarantee, and interest rate buy-down assistance

In 2019, only eight percent of US employers offered a student loan repayment benefit. However, that’s double the share from 2018. As more and more employers recognize the importance of helping Americans tackle the issue of student loan debt, a PTO-conversion program offers a process that does not require additional funding.

And with the coronavirus impacting workers’ ability to even take paid time off this year, companies have an extra incentive to convert this benefit in meaningful ways.

The Loop Archives

Open All | Close All

Health Care Reform
Training & Leadership Development
Performance Management
Attraction & Retention

Request More Info


RSS Subscribe via RSS

Join Our Newsletter

Thank you for subscribing.