Graduation season has come and gone, and summer is in full swing.
That means many new graduates are looking for or have started their first jobs. Getting a well-paying job is more important than ever, with student loan debt reaching the alarming amount of $1.6 trillion, which amounts to nearly 8% of the national income. About 69% of 2018 graduates have student loan debt.
It’s gotten so bad in fact that recently, founder of private equity firm, Vista Equity Partners, Robert F. Smith announced he would make a $40 million donation to clear all student debt from Morehouse College 2019 graduates. And 2020 presidential candidates are including solutions to this staggering problem in their stump speeches. Last month, Sen. Bernie Sanders unveiled a proposal that would cancel student loan debt for 45 million Americans.
We all know that student loan debt is bad. But it shouldn’t be ignored as a lofty number that doesn’t bring real consequences. In fact, there are very real negative impacts to the economy and the workplace. Let’s dig into a few.
This level of debt is taking a toll on American employees, which is not only bad for their well-being, but also bad for business.
Voluntary student loan benefits could be the answer.
One of the most effective ways to provide this support is through voluntary student loan repayment benefits. Similar to 401ks, such programs allow employees to set aside a portion of each paycheck pre-tax to put toward repaying student loans. Employers can provide additional support by making a taxable matching contribution.
This benefit is more than a perk; it gives companies a competitive edge in recruitment and retention. According to a survey from American Student Assistance, student loan debt is the biggest financial concern for workers ages 22-33 and 86% of employees will commit five years to a company in exchange for student loan repayment help.
If you don’t, someone else will.
Employers offering student loan repayment benefits has nearly doubled in the past year alone. In this competitive hiring market, you can’t afford to ignore what employees want. But if student loan benefits aren’t feasible for your organization, there are other effective benefit options, including access to free financial consulting services. Financial advisers can help employees create personalized budgets based on their salary and expenses, and provide valuable tips on how to save and successfully manage steady income. The opportunity to meet with an adviser, create an action plan, and get ongoing professional guidance can be a critical step in empowering employees and helping them find peace of mind.
Have more questions? Check out our guide below.