Student loan debt made huge news in 2014 when it exceeded the total US credit card debt. American students collectively owe well over $1.40 trillion in student loan debt spread out among 45 million borrowers. The national delinquency rate is 11.2% and the default rate is an astonishing 11.5%. With the average student loan debt at around $28,000, more young professionals desire a program that can help them pay down the crushing debt faster and some companies are taking notice.
Student loan assistance matters
The average cost of a college degree has risen 1300% since the days when the baby boomer generation was able to pay for college with a part time job. Since wage growth has not increase the same amount and there is a high pressure to obtain a higher degree, many students find themselves in the situation where they need to take out loans for tuition, books, housing, and living expenses because they are unable to work enough hours and go to school at the same time. After they graduate, the average payment for a borrower 20-30 years old is $351 which makes up a good chunk of an entry level salary.
Employers can be a part of the solution
There are programs available that can make a real difference to help in the repayment efforts. Employers can help by adding a company sponsored student loan assistance program to its benefit lineup. There are three main ways these programs can work:
- The employer contributes a certain amount per month toward the student debt on top of the salary. An average employer contribution of $100 per month can help an employee pay off this debt two or three years ahead of schedule.
- Refinancing opportunities that are provided by an employer are options for companies that are unable to offer more expensive options. This could take the form of lending products offered by a credit union for employees or even a debt counseling service.
- For companies that are concerned with benefit parity and want to make sure they treat every employee the same, they can offer monthly or yearly educational stipends. These funds could be used toward loans or even current education like seminars and conferences.
Student Loan benefits are good for companies too
Obviously this has to be a two-way street if the employer is taking the time and effort to implement a student loan benefit. The most tangible reward is these benefits are attractive to young, talented professionals. They help attract and retain quality talent because it shows a company’s commitment to the employee. As survey by SoFi states that 95% of professionals under 30 with student loan deb would be more willing to accept a job if it offered a student loan repayment program.
Unburdening employees from the weight of student loan debt can be one of the most valuable things a forward thinking company can do. These benefits have been shown to reduce stress and anxiety, and increase employee loyalty and positivity. As more companies adopt these programs, they will help make the idea of higher education more accessible to the next generation.
For more on how your company can implement a student loan assistance program or any other benefit, contact a benefit consultant today!