Student debt is something that touches almost everyone in some way. Even if you aren’t burdened by student debt, you participate in an economy that is affected by rising debt levels. Even you don’t owe student loan money, your tax dollars contribute to the federal student aid programs. Even if you aren’t struggling to finish your education due to student debt, you are part of an economy that requires educated and skilled workers to be able to compete globally.
Student debt has risen much higher than student enrollment during recent decades. Student debt levels increased by four times, from $345 billion in 2004 to about $1.4 trillion in 2017. During that time student undergraduate enrollment increased about 15 percent and graduate enrollment increased by about 17 percent, National Center for Education Statistics show.
The figures break down this way:
• Student debt is the fastest growing debt category since 2003.
• Student debt is the 2nd largest category of consumer debt. It is larger than either auto loan or consumer credit card debt. Only mortgage debt is larger than student loan debt.
• 46 percent of households have student loans debt
• Average student debt is $37,000
• 44 million Americans owe more than $1.5 trillion in student loan debt currently
The impact of student loan debt goes beyond struggling to make a monthly payment. If students do not complete their education, because of increasing student debt, the US will not have an educated workforce that is able to compete on a global scale. Figures from the Organization for Economic Cooperation and Development countries show that 46 percent of the population 25-64 year old has attained postsecondary degrees. In 1990 the US ranked first in the world for the number of adults, 25-34 who held four-year degrees. Today it ranks 12th.
Easing student loan debt so that completing an education isn’t a long-term burden for students is a strategy that can help employers develop an educated skilled workforce. About 86 percent of employees would commit to a company for five years if their employer offered a benefit that helped pay student loans. With a student loan repayment assistance plan, businesses can attract the best trained employees, those who have completed their educations and are ready to contribute at the highest levels.
Student loan repayment assistance could become the top benefit employees seek from their employers. Millennials that will make up 75 percent of the labor force by 2025 will face student debt for many years. About 70 percent of them will graduate with loans and 65 percent of them say they may need a second job to help pay off their loans. For these individuals student loan repayment assistance could be a top employer benefit, more valuable than a 401K or health care.
While a benefit that helps employees pay their student debt is a great recruiting tool, it can also be an important benefit for helping employees keep their skills current. If they are less concerned about student debt, they are more apt to seek continuing education. The World Economic Forum states “In order to truly rise to the challenge of formulating a winning workforce strategy for the Fourth Industrial Revolution, businesses will need to recognize human capital investment as an asset rather than a liability.”
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