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.)
New York Life Insurance Building (John Mitchell/Flickr/CC
New York Life announced a new student loan assistance benefit for its 12,000 employees this week, which will enable employees with student debt of their own to receive up to $10,200 in aid over five years, as well as student debt advice and online financial planning tools, while those who took out loans for their children will also have access to counseling and other resources, Amanda Eisenberg reports at Employee Benefit News:
Eligible employees will be able to access this benefit — which is administered by provider Student Loan Genius — upon employment, the company says. It also will expand on its current assistance offerings, such as a tuition reimbursement program and the New York Life Family Scholars Program, which assists the children of employees and agents who plan to attend college or vocational school.
Student loan assistance is an increasingly in-demand benefit, especially among millennial employees. While not as high a priority as other benefits like health insurance and 401(k) matching, employer-provided assistance with student loans can be highly valuable to millennials struggling with heavy college debt burdens: Helping an employee pay down their loans a few years ahead of schedule can save them thousands of dollars in interest payments. That’s why even though just 4 percent of organizations currently offer this benefit, that number is widely expected to grow in the coming year as employers, including public sector employers like the city of Memphis, add them in an effort to attract and retain millennial talent.
On Thursday, the Wisconsin State Assembly was poised to approve a $3 billion tax break to incentivize the Taiwanese multinational Foxconn Technology Group to build a display panel factory in the state. The deal, which still must pass the state Senate, would see the electronics giant invest as much as $10 billion in Wisconsin and hire as many as 13,000 people, but it has proven controversial, with opponents saying it isn’t worth the cost.
Another objection opponents raise is that with an unemployment rate of just 3.1 percent, Wisconsin doesn’t have enough workers to fill thousands of jobs. “Which is why,” Bloomberg View columnist Conor Sen infers, “the Foxconn strategy is really a bet that Wisconsin can recruit workers from other states”:
Illinois’s unemployment rate is 4.7 percent. Ohio’s is 5 percent. So the bet Wisconsin wants to make is that it can recruit a high-profile factory, which will draw in factory workers from other states, and that movement will have a multiplier effect creating even more jobs, leading to even more recruitment of workers from other states.
US states have long used tax and regulatory policies to differentiate themselves and attract business investment and talent—or to attract talent in order to attract businesses. With the US labor market the tightest it has been in a decade, states now face the same challenge as employers, of courting scarce talent by offering the right set of incentives. Sen points to Maine, where local employers and Governor Paul LePage are looking at ways to bring back natives of the state who have moved away:
The city of Memphis, Tennessee announced last Thursday that it was launching a new benefit to help city employees pay down their student debt, becoming the first city in the US to do so, Kathryn Mayer reported at Employee Benefit News:
The city on Thursday announced it will contribute $50 a month to the student loan account of any employee who has worked for the city for at least a year. The benefit, which will be managed by administrator Tuition.io, will kick in July 1. Alex Smith, Memphis’ chief human resources officer, says the key motivation behind the benefit is to help employees and show them they are an “important investment.” …
Smith pointed to a recent report from the Federal Reserve Bank of St. Louis that found student debt levels in Memphis increased 5% in 2015, compared to 3% nationally. The average borrower in the River City has $31,000 in student loans. Additionally, Smith notes, the “compelling and competitive benefit” will help the city attract and retain talent. … About 840 city employees — 14% of the city’s workforce — are expected to benefit from the program, Smith says.
The number of private employers offering student debt assistance programs is small but growing, Mayer adds, with Aetna, Staples, and Penguin Random House among those who recently rolled the, out. SHRM finds that only about 4 percent of companies currently offer this benefit, but Willis Towers Watson believes that figure could rise to 20 percent next year.
Asier Romero / Shutterstock.com
The Associated Press highlights a new analysis confirming that millennials in the US today are worse off than their baby boomer parents were at the same stage of life a generation ago:
With a median household income of $40,581, millennials earn 20 percent less than boomers did at the same stage of life, despite being better educated, according to a new analysis of Federal Reserve data by the advocacy group Young Invincibles. The analysis being released Friday gives concrete details about a troubling generational divide that helps to explain much of the anxiety that defined the 2016 election. Millennials have half the net worth of boomers. Their home ownership rate is lower, while their student debt is drastically higher. …
The analysis of the Fed data shows the extent of the decline. It compared 25 to 34 year-olds in 2013, the most recent year available, to the same age group in 1989 after adjusting for inflation. Education does help boost incomes. But the median college-educated millennial with student debt is only earning slightly more than a baby boomer without a degree did in 1989. … The median net worth of millennials is $10,090, 56 percent less than it was for boomers.
Marcos Mesa Sam Wordley/Shutterstock
The student debt crisis is widely considered a generation-defining issue for American millennials. At the same time that college degrees are more of a requirement in the job market than ever before, they have become so expensive that some experts have questioned whether they are even worth the money anymore. Bucking the conventional wisdom on this subject, William G. Bowen and Michael S. McPherson chime in at Vox to dispute the claim that most college graduates are drowning in debt, along with some other oft-recited assertions about this issue. The real problem, they argue, is that many students are failing to graduate:
Powerful new data from the US Treasury department makes clear that the people who are most likely to get in trouble with debt are those who dropped out of college before they earned a credential, and who therefore have weak job prospects. Often they have borrowed relatively little money but have few resources and no doubt little enthusiasm for repaying what they owe. Dropouts are almost three times as likely to default on their loans as graduates are. It is this subgroup’s debt that ought to be driving the conversation, not the debt of the “average” college student. …
A new working paper from the National Bureau of Economic Research looked at students who exited for-profit colleges between 2006 and 2008 and found that many of them had failed to graduate, while few emerged with greater earnings potential—in fact, most saw their earnings decline:
Across nearly all degrees and certificates, our results reveal disappointing outcomes for for-profit students. Certificate, associate’s, and bachelor’s degree students generally experience declines in earnings in the 5 to 6 years after attendance relative to their own earnings in the years before attendance. These negative average effects are largely generated by the high proportion of students do not complete their program of study. … Separate analyses of the ten most popular fields of study reveal that for-profit students experience higher returns than public students in only one field (cosmetology), yet none of the top ten fields can be shown to generate positive total earnings gains for for-profit students.
For-profit colleges have also been embroiled in a series of scandals, lawsuits, and investigations in recent years, over allegations of false or misleading advertising and even fraud, and these institutions have been identified as a major contributor to the glut of student debt among young Americans. As attorney David Halperin warns at the Huffington Post, these controversies have implications for employers, as some of these for-profit colleges with the spottiest track records have partnered with major organizations to provide career training for their employees or help them earn degrees, whether as a reward or as part of a learning program.
It’s not just for-profit colleges that are producing lackluster results for students, however. “There are similar problems in nonprofit colleges, which enroll about 2.7 million students a year,” the Wall Street Journal’s Josh Mitchell adds: