CommonBond, a financial technology company specializing in student loan refinancing and consolidation, recently surveyed 1,500 employees and 500 HR executives across the US to see how student loan debt assistance fits into employers’ financial wellbeing strategies and how well these programs were really meeting the needs of employees. The results of the survey indicate that student debt has a significant impact on the entire American workforce—not just millennials—and that organizations could make a big difference to their employees’ financial health by focusing financial wellness benefits on this form of debt.
Needless to say, CommonBond has a business interest in reaching that conclusion, but its findings happen to dovetail with what we already know from previous studies and our ongoing research at CEB, now Gartner, on global trends in education benefits.
Perhaps the most important of CommonBond’s findings is that 78 percent of employees who currently have or expect to accrue student loan debt want their employer to offer a student debt repayment benefit, including 65 percent of employees in this category over the age of 55. Among employees with student debt, repayment assistance is the most commonly requested financial wellness benefit, CommonBond found, yet HR leaders rank it as their third priority.
In our most recent survey of over 6,000 employees across the globe, we also found that employees value these benefits highly: 61 percent of employees see education benefits as an important factor in making a decision about a job offer. Of the organizations that offer education benefits, 90 percent provide tuition assistance—which has proven hugely successful at organizations from Cigna to Chipotle—but only 7 percent provide student loan reimbursement.
(CEB Total Rewards Leadership Council members should stay tuned, as more insights on education benefits from our annual benefits communication survey will be released next month.)
While one survey of workers with student loans found that they wouldn’t prioritize debt assistance over essential benefits like health insurance, 401(k) matching, and paid vacation, research has consistently found over the past several years that indebted employees would rather have this benefit than not, as it can help them save thousands of dollars in loan payments and cut down the time it takes to become debt-free.
Yet just offering student loan reimbursement or tuition reimbursement isn’t enough, our research shows; to reap the greatest gains in terms of business outcomes, you need to make sure your employees are actually using them. When employees take full advantage of these benefits, our recent survey finds, employee perceptions of total rewards improve by as much as 18 percent.
CommonBond’s survey also highlights the reality that student debt “cuts across all age groups, including parents who are taking out loans for their children”:
Almost 75 percent of all workers have taken out loans to fund their own education, while 21 percent of workers expect to take out a loan for a child or other family member’s education in the next five years. This debt has a serious impact on well-being: employees with student debt were nearly twice as likely to be stressed about their personal finances.
Student debt is often talked about as a generational issue primarily or exclusively affecting millennials, but some older employees are still paying off loans for educations they received decades ago, while others are going into debt to pay for college for their grown children. A T. Rowe Price survey in 2016 found that most US parents of children who will reach college age within the next decade were willing to postpone retirement or even put saving for their children’s college funds ahead of their own retirement savings, potentially jeopardizing their ability to retire at all.