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Employers Are Adopting Student Loan Assistance Programs

Jun 26, 2019

 

Key Takeaways

  • Student loan debt can impact employees' professional, as well as their personal lives.
  • Employers can use student loan assistance programs to update their employee benefit offerings.
  • Helping employees better manage their student loans can make them happier and more productive.

 

The soaring increase in student loan debt in the United States has become a growing burden not only for college graduates, but also for many parents. Total outstanding student loan debt has reached a staggering $1.5 trillion, making it the second highest category of consumer debt behind mortgage debt.1

It has become a growing issue for employers as well, as student loan debt can impact not only employees' personal, but also their professional lives. Financial stress can result in increased levels of absenteeism, disability and turnover, as well as increased healthcare costs. Higher levels of student loan debt among employees also can boost costs for employers if those debts force employees to work longer because they can’t afford to retire.

 

Total student loan balances by age group
Age Group Percentage
under 30 38%
30-39 27%
40-49 16%
50-59 12%
60+ 7%

 

As the financial needs of employees change, employers are beginning to add student loan assistance programs to their benefit offerings. These programs can help employees create a plan for managing their monthly payments and eventually paying off their debt. They typically also provide an option for employers, at their discretion, to make payments to employees to help them pay down their debt.

Employers can use student loan assistance programs to update their employee benefit programs and address the emerging financial wellness needs of their workforce. Helping employees better manage their student loans can not only decrease their financial stress and improve their chances for a secure retirement, it also can make them happier and more productive employees.

 

 

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Footnotes

  • 1Looney, Adam, and Constantine Yannelis, The Brookings Institute, ”Borrowers with Large Balances: Rising Student Debt and Falling Repayment Rates, p.3,February 2018.

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