(Statistic Source: Tower Watson)
Student loan debt swelled to $1.2 trillion dollars in 2014, with an estimated $68 billion added on by the class of 2015 (the most indebted graduating class as described by Mark Kantrowitz, publisher at Edvisors). While the labor department reports lower rates of unemployment for people aged 25+, the impact of student debt is still felt throughout the economy.
According to the 2015 Student Loan Burden Report, college graduates are postponing marriage, delaying major purchases such as houses & cars, and are postponing moving out of their parents’ house. The amount of debt accrued by these graduates has more than tripled over the past 20 years (not including students who drop out), averaging around $35,000 per graduate.
In an effort to alleviate some of these pressures, PricewaterhouseCoopers has partnered with Boston-based technology company Gradifi to contribute over $1,000 annually towards employee student loans. The perk seeks to draw new talent by presenting a benefits package that is relevant to new hires, as opposed to the traditional retirement and health plans.
Similarly, Starbucks partnered with Arizona State University’s online program to offer full-time and part-time employees an opportunity to get their bachelor's degree at no cost. The coffee conglomerate plans to help over 25,000 employees graduate by 2025 -- costing about $250 million. (If you'd like more information on this program click here.)
While the student loan benefits will no doubt help recent college graduates stay on track with their loan repayments, the amount of student loan debt that exists and continues to grow will hardly be affected by these changes.
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Managing the student debt problem is not something that employers should be taking on alone. Educational institutions, policy-makers and borrowers are all stakeholders. College-loans are a tool students can use to invest in their future, but without a comprehensive understanding of financial principles and debt literacy, loans can end up doing more harm than good.
Thanks to the age of information, employers now have access to millions of data points that they use to make better business decisions. They are beginning to understand the importance of attracting and keeping top talent. A financial wellness program, including one with a loan repayment component, is a two-pronged solution that benefits both employers and employees.
