A recent report from the Consumer Financial Protection Bureau shows that many grads are waiting longer to start student loan repayment and taking longer to pay off those loans. Employers have an opportunity to attract and retain top talent by helping alleviate some of this financial burden for their employees.
Why do so many people have student loan debt?
There was a time when college students could cover tuition for the entire year with hard work at a summer job. Today, students are out of luck. College tuition and fees have increased by 63 percent between January 2006 and 2016. In this same period, incomes have decreased by 7 percent, making college unaffordable for 70 percent of Americans without student loans.
The burden of student loan debt
A Student Loan Hero survey also showed that many Americans with student loan debt are putting off key financial and life milestones as they stare down loan repayments. Millennials especially are feeling the weight, citing “too much debt” as their number one money stress and student loans as their second-most stressful form of debt. Though graduates are struggling, wages have remained largely stagnant in recent years.
It’s not just millennials feeling the weight of student loan debt, though. The CFPB report shows that half of student loan borrowers are not starting repayment until after the age of 34. Moreover, only 15 percent of borrowers are beginning repayment under 25, down from 30 percent in the last 10 years.
Student loan repayment benefits attract and retain talent
For more than half of Americans with debt, the stress negatively affects their productivity at work. Offering student loan repayment benefits can help relieve some of this stress for employees.
Currently, only about 4 percent of employers offer student loan assistance as a benefit. Employers can use student loan repayment benefits to stand out from other companies and attract millennial talent. Millennial turnover in jobs is resulting in a loss of over $30 billion a year for the U.S. economy. For debt-burdened employees, student loan assistance encourages them to stay.
Motivating employers to offer student loan repayment benefits
As new officials take their place in the government, Congress should look to pass legislation providing companies with a tax benefit for offering student loan repayment benefits. 401(k) matching was boosted by similar legislation years ago, so a tax benefit would likely increase employer adoption of loan repayment benefit packages.
Even without the tax break, companies have already begun to help their employees pay off their student loans. Startups like Goodly are making it easier and easier for employers to offer student loan repayment as a benefit.