Most College Graduates Want Employers to Help Pay Off Student Loans
Posted By Terri Williams on November 30, 2015 at 10:45 am
Student loans are front and center in the minds of most current college students and recent college graduates. Figuring out how to pay for college, even with student loans, is worth the effort. Many students were fortunate enough to alleviate their initial amount of money borrowed by combining scholarships and grants with federally backed and private student loans. However, the 40 million holders of student loan debt owe an average loan amount in the range of $30,000 – $35,000. And in fact, a previous GoodCall® article revealed that student debt is stopping Millennials from purchasing homes. Even after four years of employment, Millennial workers are struggling to make timely student loan payments.
How do Millennials hope to address these difficult realities? A new study by iontuition reveals that these young workers want employers to pitch in and help with student loan debt and would actually prefer this type of assistance to other employee benefits. Some of the study’s key findings are as follows:
- 75% of respondents would like to work for a company that provides assistance repaying student loans (this includes matching contributions and loan management tools)
- 75% of respondents would prefer a loan match to healthcare
- 49% of respondents would prefer a loan match to a 401(k) plan
To help explain these findings, GoodCall contacted three experts for their takes on the survey results.
The invincibility factor
One explanation for the survey results is that young Millennials are focused on the present and not as concerned about the future. According to Kyle Winkfield, managing partner of O.W.R.S. in Rockville, MD, “Young people are generally quite healthy and because of this, are more willing to ‘gamble’ with healthcare benefits.” He says that many of them prefer to direct their income elsewhere because they believe that they’re invincible.
“Based on the results of the survey, what seems to be scarier than potential healthcare bills is the current looming debt of student loans,” says Winkfield, who adds, “The ‘here and now’ is always much scarier than the ‘what ifs’ of the future because of the belief that worries for the future can be written off for another day.”
As a result, Winkfield says that young employees want to get out of debt as soon as possible so they can “get on” with their lives. However, he warns, “While eliminating debt as quickly as possible is an admirable goal, no one should ever forego health insurance. While student loans can feel overwhelming, the weight of unpaid medical bills is much more tragic.”
Student loan debt crisis
Employer student loan repayment programs are obviously popular among Millennials, but are they really making a difference or just appealing to popular sentiment? According to Steven Rothberg, President and Founder of College Recruiter, “Recent graduates – who are not all young – have a preference for student loan repayment programs because their student loan debt is in a crisis and the other benefits address important issues, but issues which aren’t yet a crisis.
Rothberg notes that some corporate employers have already implemented these types of programs, but he says the benefits typically are $1,000 to $2,000 per year, and at that rate, the new hire would need to work for that employer for decades to pay off their loans.
Employer student loan repayment programs
Financial and consulting juggernaut PricewaterhouseCoopers (PwC) recently announced a student loan repayment program. Effective July 2016, PwC will provide up to $1,200 a year to help associates and senior associates (entry-level employees and those with up to six years of experience) pay back their student loans.
Michael Fenlon, PwC’s Global Talent Leader, tells GoodCall that over a period of time, this benefit may help reduce student loan principal and interest obligations by as much as $10,000 per employee, and this can shorten loan payoff periods by up to three years. “Since PwC recruits over 11,000 new hires from campuses each year, it is important to our people to provide a meaningful way to help reduce their debt,” says Fenlon.
It’s a smart move and will undoubtedly offer the company a competitive recruiting edge. However, Winkfield says, “The programs help as they make a dent for the employees, but they’re far from a solution to the problem caused by what is, in effect, a massive subsidy for the financial services and higher education industries paid for by our youngest workers and their parents.”