Employees in every industry are burdened with student loan debt. According to the latest Federal Reserve data, Americans carry over $1.5 trillion in student loans. The amount continues to grow every quarter. PricewaterhouseCoopers’ 2018 Employee Financial Wellness Survey revealed that 54% of employees are stressed about their finances, and 64% are impacted by student loans. So, what can we do about it?
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As employers, we are in the unique position to drive the economy. What we do will have a direct effect on the financial wellness of individuals and the economy at large. There are many other factors involved with economic growth, but giving employees more financial security and consumption power is within our control.
Shrinking the student loan debt begins at work. Employees gain their financial power from the income that they earn from their jobs. They may also benefit from additional resources that can be offered through their employers, which may lead to a shift in the direction of student loan debt.
The Student Loan Benefit Revolution
A 2018 CommonBond survey of 1,500 workers found that 78% of employees with student loan debt want their employers to provide ways for them to pay down their loans faster. Yet, only 4% of employers in the United States offer student loan repayment plans (SLRPs), according to the Society for Human Resource Management’s (SHRM) 2018 Employee Benefits Survey.
Employees want benefits that provide a direct impact on their long-term finances, and companies like PricewaterhouseCoopers and Fidelity are taking notice. There are several ways that employers can provide student loan repayment assistance or financial support for employees who carry debt.
- Biweekly payroll deduction: If employers want to help employees pay back their student loans in a more direct way, setting up a biweekly payroll deduction that goes toward their student loan payments is an effective way to do so. Employees should be able to see how the payments are applied and track their progress.
- Financial counseling: Nearly half (48%) of organizations surveyed in SHRM’s 2018 Employee Benefits Survey offer some kind of financial advice to their employees. This can take the form of online resources, one-on-one counseling sessions, or in-depth classroom instruction. Financial counseling with a focus on student loan repayment can help employees take care of their loans.
- Bonuses and incentives: While these do not have to be directly related to student loan repayment, employees can use this extra money to go toward their loans. It could be in the form of an annual or holiday bonus or one that rewards employees for exceptional work.
One Step at a Time
Tackling student loan debt from the employer side is only one of the ways that we can begin to shrink the national student loan debt. Much more needs to be done from all sides of the issue, but we can use the resources that we have available to help our employees lower their own student loan debt.
As always, it is important to consult with a benefits lawyer and the Internal Revenue Service (IRS) before implementing new benefits programs at work. Benefits that address the financial pain points of your employees will help you put together the most impactful programs for your workforce. If we are going to make a difference, let’s start at work.
Emeka Oguh is the founder and CEO of PeopleJoy, a financial wellness company.