Student loan education, repayment and refinancing specialist CommonBond on Tuesday hosted a panel discussion about the topic of “the missing benefit,” by which the mean payroll integrated student loan repayment and refinancing support for employees.
Journalists and financial industry professionals were invited in by the firm to hear speakers, including Healther Coughlin, U.S. solutions leader for financial wellness at Mercer, along with Naz Vahid, managing director and law firm group head at Citi Private Bank, and Tara Malone, vice president of employee benefits for Young & Rubicam Group. The panel spoke broadly about the student loan debt challenges facing workers across the United States, and they all agreed that both employers and employees will benefit from greater uptake of student loan repayment benefits.
According to the panel, the total amount of U.S. student loan debt has topped $1.4 trillion, including nearly $75 billion in “parent PLUS loans” taken out by individuals on behalf of their kids. In terms of workforce percentages, fully 72% of workers say they have outstanding student loans or had successfully finished repaying loans while working. While it’s probably not a surprise to hear that 59% of those ages 22 to 44 currently carry student debt, it is perhaps more startling to see that 21% of workers over the age of 45 currently have student debt. Other stats show 10% of individuals have both their own student debt and that of a friend or family member that they are responsible for, while 21% plan to take out debt in the next five years to help finance somebody else’s education.
“These numbers show that student loan debt repayment is a universal workforce challenge,” Coughlin stressed, citing her own statistics from within the Mercer book of business. “It is not just an issue for Millennials.”
Nor is it only in lower-earning jobs and industries that individuals struggle to repay student debt. From her perspective working with law firm clients, Vahid suggested it is not uncommon to hear about younger married couples with more than $1 million in combined student loan debt. According to Common Bond’s survey data, twice as many people with student debt than without are worried about their personal finances, and across all generations, financial worries drop drastically for those people who do not have student debt.
Sharing her perspective as an active HR corporate professional, Malone suggested the impact of student debt is so pervasive and damaging that workers aren’t opting into traditional financial wellness benefits that highlight saving for the future. Indeed, 61% of survey respondents who say they worry about their finances regularly also say student debt has delayed or prevented them from saving for retirement.
Plugging for its own services, which include helping employers establish payroll integrated student debt repayment benefits, CommonBond experts suggested most financial wellness programs, as they have been rolled out so far, are tailored to workers without student debt. As CommonBond VP of Partnerships Leigh Gross pointed out, approximately four in five HR leaders reached for the survey indicate they are planning to make improvements to their employee benefit offerings within the next three years, but they are failing to take into account those with student debt.
“For workers aged 22 to 34, student debt significantly outranks retirement as the top financial concern,” he noted. “Those without student debt had a much different perspective. Retirement and health care were cited as their biggest financial stresses—as they should be.”
As the experts explained, there is something of a disconnection between what employers view as the most progressive and valued benefits, versus what employees want to see. Employers are proud of their offering of “general financial planning” and of “tuition reimbursement.” Yet employees across all age groups and industries with student debt consistently rank student loan repayment support ahead of tuition reimbursement and financial planning as a preferred benefit.
The speakers all indicated that offering student loan repayment is a tremendous way to improve the loyalty and longevity of Millennial employees—and to attract new talent of all generations in competitive industries. Currently only about 5% of employers in the U.S. offer any type of student loan repayment benefit, but Coughlin suggested Mercer believes this type of benefit “could soon become table stakes.” Tied to proper education and the availability of 529 college savings plans, the offering of student loan repayment support can help individuals as much or more than any other single benefit, she concluded.
“More than 86% of employees who have student debt for themselves or others, or are planning to take out loans in the next five years, said they would be more inclined to stay at their current company if their employer provided monthly student loan repayment support,” Gross noted. “Additionally, 85% of those said they would commit to staying at least three years or more. Another 41% said they would stay at least until their loans were paid off.”