Many have already begun to address the issue, as more companies are adding student loan repayment assistance plans to their total rewards package.
A national debt
According to Aon Hewitt’s “2016 Financial Mindset Study,” 28 percent of workers have an outstanding student loan. Although it is primarily millennials that have this debt, the debt is not exclusive to them. According to a separate report by the Consumer Financial Protection Bureau, the number of consumers age 60 and older with student loan debt has quadrupled in the United States over the last decade.
Americans owe close to $1.3 trillion in student loans. The average person owes more than $30,000. This disproportionally impacts millennials and a large percentage of them believe their student loan repayments will last well beyond their 30s and 40s.
The mental effect
Student debt creates financial stress for individuals, impacting their everyday living. Outstanding student loan debt has led to a postponement of life milestones, such as marriage, car and home ownership, and the ability to save for one’s retirement future.
A study by The Center for Retirement Research at Boston College estimates that the growth in student loan debt could increase the number of Americans facing inadequate retirement income by 4.6 percentage points.
Impacting business
Since this increase in financial stress has an impact on a company’s bottom line, employers are seeking ways to lessen employees’ financial worries while improving organizational productivity. According to the recent “Inventory of Total Rewards Programs & Practices” survey, 4 percent of companies are now offering some sort of assistance with student loan debt repayment.
What’s more, an Aon Hewitt survey has also underlined that 59 percent of millennials value student loan repayment assistance more than other options, including more workday flexibility. Given the competition for top talent, employers must update their approach to engage and retain millennials — especially among women who, in many surveys, were found to carry more student loan debt.
As benefits become more flexible and companies look for ways to improve the financial wellness of their workers, more companies have joined the ranks of businesses offering a student loan repayment benefit to their employees.