A Case for Reimbursing Your Employees’ Student Loans
Workplace Wellness It’s staggering: 40 million Americans have student loan debt, averaging $37,000 at the undergraduate level. Student debt has reached more than $1.3 trillion in the U.S.
Although several generations may be struggling with such debt, according to PricewaterhouseCoopers' (PwC) 2016 Employee Financial Wellness Survey, 42 percent of millennials say they carry student debt, and 79 percent said their debt is hampering their ability to meet other financial goals.
Stress-free for a better bottom line
This is a problem for employers, too. The stress caused by financial debt has led to an increase in employer-sponsored financial wellness initiatives. Organizations acknowledge that financial worries negatively affect workplace productivity and people’s well-being, contributing to a decline in individual and company performance.
In an attempt to address this issue and create a competitive edge in the attraction and retention of employees, several companies have rolled out programs to assist individuals in paying off this debt. Since millennials now make up the largest portion of the workforce, finding a way to appeal to a younger workforce makes sense for many employers, especially those organizations who regularly recruit college graduates.
Debt’s broader impact
According to research from the New York Federal Reserve and others, the student debt burden is preventing many individuals from buying homes, autos, getting married and so on, thereby, impacting the country’s economic growth.
“...42 percent of millennials say they carry student debt, and 79 percent said their debt is hampering their ability to meet other financial goals.”
In addition, student loans are diverting money that could otherwise go to 401(k) accounts. Most college graduates are entering the workforce with too much student loan debt to even begin thinking about retirement. Having a significant amount of student loan debt hurts the ability to take advantage of that opportune moment to start saving as someone just enters the workforce.
There are several types of approaches to offering a benefit that targets student loans, including providing: counseling resources, student loan consolidation programs (a platform that helps employees find the best way to consolidate their many student loans into one repayment plan), student loan repayment matching, as well as student loan repayment assistance. Some employers are even offering loan repayment funds instead of sign-on bonuses.
Forging connection to your company
Organizations, like PwC, Aetna, Natixis, CommonBond, Chegg and NDVIA, are leading the charge, adding student loan repayment plans to their total rewards package. Research increasingly shows a student loan repayment benefit to be a powerful recruitment and retention tool. Developing programs that will assist employees in paying down this debt faster is a win-win for employees and employers.
Most surveys indicate that 3 percent to 4 percent of employers currently offer some kind of student loan repayment program. It is projected that nearly 20 percent of employers may offer this type of program by 2018. Such a benefit can relieve the financial pressures of many individuals, enable them to save for the future, while helping companies attract and retain employees while increasing organizational productivity levels.
Will your company be one of them?