Student debt makes big headlines at graduation time:
Average student loan debt per borrower is $32,731
Student loan debt reaches $1.52 trillion
44.7 million students have loan debt
Student loan payments loom ahead for 2019 graduates, and they have been a major financial consideration for graduates in the year before them. People who face large amounts of student loan debt face difficult financial choices. Student loan debt also impacts the general economy. High debt can hamper economic growth.
The number of students who borrow to fund their education has increased in recent years. Today 39 percent of undergrads borrow money to attend a four-year school compared to 26 percent in 1996. The number of students who borrow to attend community colleges has increased by 10 percent.
Millennial employees feel the impact of student debt in their personal lives: 40 percent of millennials employees have student loan debt and 80 percent of them say it stops them from achieving other financial goals.
Many millennials have put off buying a home, saving for retirement, or starting a family because of student debt payments. Delaying these lifetime milestones and the stress of debt leaves some millennials to question the value of their education. Only 51 percent of millennials with a bachelor’s degree feel that the lifetime financial benefits of their degree outweigh the costs compared to 69 percent who do not have debt.
In spite of student loan debt, there is a real advantage to people who have a degree. Over their lifetime, bachelor’s degree holders will earn $1 million more than a person with a high school diploma. They have a better chance of steady employment. College graduates are also:
• three times less likely to live in poverty
• almost five times less likely to go to prison
• almost four times less likely to smoke
• experience 10 years longer life expectancy
Graduates are also are more likely to vote, volunteer in their communities and donate more to charities. Each of these personal benefits to graduates also creates a benefit for society as a whole. A healthier population puts less drain on medical and social programs, more involved citizens create safer communities and graduates higher income results in a stronger tax base and increased tax revenue.
Student loan assistance is a forward-thinking benefit for employers to offer their employees. The stress of student debt can impact employees and employers both. Stress caused by financial worries can cause employees to lose focus at work and have lower productivity, have higher absenteeism rates and more health problems. The Consumer Financial Protection Bureau report Innovation highlights: Emerging Student Loan Repayment Assistance Programs states “Since the Great Recession, financial distress remains particularly acute among certain segments of the American workforce, including young workers. A growing number of public- and private-sector actors recognize the far-reaching impact of this unprecedented level of student debt on consumers’ lives, and have taken steps to address some of the myriad challenges posed by this mounting debt.”
In an increasingly tight labor market student loan assistance is one way businesses can differentiate themselves. The SHRM 2018 Employee Benefits Survey reports that only 4 percent of companies offer student loan assistance. This number hasn’t increased since 2015, the first time SHRM started surveying about this question. Student loan assistance is a benefit that a crucial need for today’s employees. It also is a strategic investment for businesses.
Student loan assistance such as Edcor’s Freedom program will help recruit workers. Graduates will see their employer as someone that recognizes the importance of education and values the financial investment the employee has made. Employers who help employees repay student debt validate the importance of education at a time when the US needs to increase tits number of educated workers to compete in a global marketplace.
In addition to recruiting educated employees, student loan assistance will help retain the very best employees. This benefit will help workers continue their education, creating value for their employer. With less debt burden, employees can engage in lifelong learning which will keep them prepared with current skills and knowledge.
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