August 1, 2018
Employers are beginning to offer innovative new benefits to the next generation of employees, including student loan debt benefits for today's Millennial workforce.
You can’t escape the headlines about a new financial concern unraveling in the U.S.: student loan debt. While the 2008 financial crisis fueled by a subprime mortgage bubble is a not-so-distant memory, many are becoming increasingly troubled by the constant bombardment of news about outrageously high student loan debt and whether this may contribute to a new crisis.
According to Student Loan Hero statistics taken from the Federal Reserve in May 2018, student loan debt was topping out at about $1.48 billion, up from $1.4 billion at the end of 2017. Delinquency is at 11.2%, and the average monthly student loan payment is $351. Student loan debt is the second-highest category of debt, only trailing mortgage debt and exceeding U.S. credit card debt by $620 billion.
This is a huge financial problem that needs to be addressed, and what better place to attempt to manage it but the workplace?
As might be expected, student loan debt has many economic implications for the borrower: delayed savings for retirement, lack of an emergency fund nest egg and delayed buying of big-ticket items such as cars and homes. Employers are not blind to this plight and are starting to take action.
Many employers are prompted to evaluate student loan debt solutions as an employee benefit by news headlines, grassroots requests by certain employee groups and individual employee feedback. Also, as part of their annual employee benefits review, benefits managers may be seeing a decline in participation in some of their benefits programs and as a result, conduct an overall review of employees’ overall financial wellness.
A growing impetus is a shift in workforce dynamics; Baby Boomers are retiring and Millennials are taking their places. In many industries, there is a war for talent because the employee pool is decreasing. Employers recognize that to attract and retain employees, they need to appeal to professional Millennials’ needs. In many cases, this is to provide benefits to help manage student debt.
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