Can employers afford to not offer student loan assistance?
Employer-sponsored student loan assistance can help employers earn high marks in more ways than one.
Whether you employ five or 5,000 employees, the chances of your workforce being impacted by student loan debt are the same: very likely. Today, one in five American workers1 are saddled with student loans totaling an astronomical $1.5 trillion2. In fact, student loans have graduated to being the second largest class of consumer debt, trailing only mortgage debt3.
To attempt to curb this problem, American workers are turning to employers for relief through employer-sponsored student loan assistance programs. Let’s take a closer look at employer-sponsor student loan assistance and how it can help create a win-win for the employer and employee.
Student loan debt: one problem, all generations
Between parents helping their kids pay for college and students taking out their own student loans to attend school, student loan debt has left no generation untouched.
- Centennials (up to age 24) 7 out of 10 new college graduates enter the workforce with an average of $37,172 in student loan debt.2
- Millennials (age 25-39) 80% report student loan debt makes it difficult for them to meet other financial goals3.
- Gen X (age 40-54) carries a staggering $548 billion in student loan debt4.
- Baby Boomers (age 55-74) 31% stopped saving for retirement to focus on paying off student loans5.
Student loan assistance can help employees save for retirement
Employees who have student loan debt are often deeply conflicted about whether to focus on paying off student loans or saving for retirement. According to Voya’s proprietary research, 98% of employees with student loan debt say they’d likely save more for retirement if they had their debt under control6. At the same time, a sobering one in three Baby Boomers put saving for retirement on hold because of student loan debt7.*
In addition to potentially causing delayed retirement, student loan debt is a significant contributor to employee financial stress, which amounts to more stress than all of the other factors combined. And it impacts virtually every facet of their life, including their on-the-job performance and even holistic wellbeing.
Employer-sponsored student loan programs can help create an employer advantage
Currently, only 4% of employers2 offer any type of student loan plan to employees. Because of the range of potential benefits to be gained by employers through student loan assistance programs, you can potentially create a competitive advantage for your company. Here’s how:
- Gain the recruiting edge. Considering 93% of employees with student loans would take advantage of a sign-on bonus to help with student loan payments, offering some type of student loan assistance can help companies attract top talent9.
- Bolster employee retention. 86% of employees aged from 22 to 33 suggest they would commit to an employer for five or more years if they helped them pay off their student loan; while 92% said they would take advantage of the program if offered9.
- Improve productivity. Almost half report that personal finances distracted them an average of three or more hours a week while working1. Based on a 40-hour work week, that equates to 7.5% of lost productivity.
- Help keep your employees physically and mentally healthy. Financial stress can take a real toll on the physical and mental wellness of employees. This may increase their utilization of health insurance and possibly increase the number of sick/vacation days your employees take.
- Customize an employer-assistance program. When it comes to offering employer-sponsored student loan programs, employers have a range of options. It’s about choosing the right partner who will provide the most savings to employees — whether it involves the employer contributing or not.
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1 Voya internal data, September 2019.
2 SHRM, “Employers Explore Repaying Student Loan Debt, July 2018.
3 LinkedIN, “No, Millennials will not be 75% of the workforce in 2025,” September 2019.
4 Credit.com, "U.S. Average Student Loan Debt Statistics," June 2019.
5 AARP Press Room, “Rising Student Loan Debt Prevents Saving, Buying a Home, “September 2018.
6 Voya Internal Data, September 2019.
7 AARP Press Room, “Rising Student Loan Debt Prevents Saving, Buying a Home, “September 2018.
8 PWC Employee Financial Wellness Survey, 2018.
9 Voya Internal Data, September 2019.