There is a student loan crisis happening right now for employees. Student debt rates have surged above credit card debt, mortgages and auto loans. For some perspective, 70% of employees graduate from higher education with debt averaging about $40,000. And it’s taking them nearly 22 years to pay it off. Furthermore, student loan debt is disproportionately held by underrepresented employee groups. Women hold two thirds (66%) of student debt, totaling $1Trillion. Black and Latinx borrowers have 31% higher student loan debt and members of the LGBTQ community have 17% more student loan debt. As a result, employees with student debt report more financial stress, and overall experience “life delay” due to trying to catch up, frequently displacing more traditional concerns such as buying a home or supporting an expanding family.
The Price of Student Debt
Worries about student loan debt don’t dissipate when an employee walks into the workplace. Employees carry the effects of student loan debt with them every day and it’s impacting their work and your bottom line. Financial stress, including student debt stress, can take a toll on an employees mental and physical wellness resulting not only in increased utilization of your company’s health insurance, but also potentially add to the number of sick/vacation days they take. According to PwC, stress can also reduce an employee’s ability to focus on their work, and therefore impact engagement. Furthermore, 80% of Millennial employees surveyed said that their student loans have a moderate or significant impact on their ability to meet their financial goals, and 49% said they are distracted by their finances at work, spending three hours or more each week dealing with issues.
High levels of student debt could tempt young employees who may tend to job-hop more often than older counterparts, to leave your company for higher salaries or switch to companies that offer loan repayment benefits. As per a survey conducted by the American Student Assistance (ASA®), 86% of employees would commit to a company for five years if the employer helped pay back their student loans. Additionally, that same survey found that 62% of employees who have student loans say they’ve put off investing for retirement. And employees who struggle to keep up with student loan payments are also less likely than their loan-free counterparts to participate in other workplace programs such as 401(k) matching plans, according to an Aon Hewitt study, which also found that 51% of employees who have student loans contribute no more than 5% of their pay to their workplace retirement plan.
It’s no wonder why employees with student debt prefer student loan repayment assistance over 401k’s and health insurance! Enter: Goodly. The student loan repayment benefit that helps you retain top talent, and helps employees pay off their student loans 30% faster.
Vendor Spotlight: Goodly
Goodly makes it easy for employers to offer student loan repayment benefits. Their platform allows employers to make payments directly to employees’ student debt, helping employees avoid missed payments and avoid compounding interest. We’ve included some program highlights below:
- Employer Contributions: Applied directly to student loans as a secondary payment to accelerate payment, sent directly to the loan lender.
- Tax Free Contributions: For employers up to $5,250, due to the CARES Act
- Flexible and Inclusive: Employers can choose how contributions will occur. Whether it be tenure based, a 401k/403b rerouted contribution, parent plus loans (inclusive of employees with loans for themselves or parent employees with loans out for their kids, or grandkids) and more.
- Ability to decide on waiting period.
- Family Contributors: Employees can invite friends and family to make payments to student loans using Goodly software.
- No Refinancing: Goodly is the only vendor that does not offer refinancing through their platform.
- Global Benefit: Ability to support International student debt, and global employees
- Student Loan Counseling: Access to certified loan counselors and one on one assessment of student loan debt included in the platform
- Secure: Incredibly secure platform using SOC2 compliance, 2-factor authentication and bank level 256 encryption.
- Admin Support: 100% account support and co-branding.
- Pricing: ~$4-6/per user per month which is standard pricing for such platform w/ a minimum of $25 employer contribution.
- Not sure if your employees have student debt? Goodly will work with you to assess your workforces need for a student loan repayment benefit.