Noah Shute is an Economics major at Wake Forest University in his second year. Sara Paulino will major in Business and minor in Sociology when she enters Gordon College in September. What they have in common is that both are recipients of the 2018 Genesis Community Scholarship Fund. On June 5, 2018, at Town Hall in Lexington, Massachusetts, they were among a group of 75 high school and college students who received help to defray the cost of a college education.
I was in their shoes nearly 50 years ago, when I was awarded a scholarship at the same event. My scholarship paid about half of my tuition. Unfortunately, even though the awards have increased somewhat over the years, they have not kept pace with the rapidly rising cost of a college education; if Shute and Paulino are like many college students, they will likely have to secure loans. A college student from a different era, I was able to work my way through college. That scenario simply does not exist today.
Student Loan Debt Today
Today, overall student loan debt exceeds credit card debt and auto loans and stands at a staggering $1.52 trillion. In Massachusetts, the average amount of student loan debt in 2016 was $31,563. For more, read Student Loan Debt Statistics in 2018: A $1.5 Trillion Crisis by Zack Friedman.Today, overall student loan debt exceeds credit card debt and auto loans and stands at a staggering $1.52 trillion. Click To Tweet
Millennials are now the largest generation in the workforce, and today’s unemployment rate is the lowest it has been since 2000. These facts together have given rise to a new form of employee benefit: the Student Loan Repayment Benefit. According to Max Fay in his article Student Loan Repayment Benefit: How it Works, Company List & Payments, only 4 percent of U.S. companies offer the perk, but 8 percent of companies with 40,000 employees or more have it. Compelling statistics indicate that more companies might want to make this new benefit part of their employment offering.
Consider the following information according to the Federal Reserve & New York Federal Reserve in 2018:
- By 2025, millennials will make up 75 percent of the workforce.
- 44.2 million Americans have student loan debt.
- Borrowers have a delinquency/default rate of 10.7 percent (more than 90 days delinquent).
- Total increase in student loan debt in most recent quarter was $29 billion.
- Total delinquent balances (30+ days) totaled $32.6 billion.
- New and serious delinquent balances (90+ days) totaled $31 billion.
What Employers Are Doing About Student Loan Debt
When contemplating job offers, prospective employees will always consider the job’s health insurance offering and a 401(k) program. But, considering millennials might be less enamored with a robust health insurance program (because by and large they are healthy) and maybe even less so with a 401(k) retirement program (because retirement is so far away), helping them pay college debt might be the benefit that catches their eye. For the prospective employer, and the workers they hope to attract, it might be a game changer.
Here is a sampling of what some well-known companies are offering:
- Aetna: $2,000 annually, up to $10,000.
- Fidelity: $2,000 annually, up to five years.
- Kronos: $500 annually.
- Nvidia: $6,000 annually up to $30,000 total.
- Price Waterhouse: $1,200 annually, up to six years.
- Staples: $1,200 annually, up to $3,600 total.
Whether the Student Loan Repayment Benefit becomes part of the overall employee benefit offering for most companies remains to be seen. However, given the competition to find the right talent from a growing pool of potential candidates who are saddled with student loan debt, my guess is that employers will have to consider it.
And just maybe, in a few short years from now, when people like Noah Shute and Sara Paulino enter the job market, the most attractive job offer might come from an employer who helps them pay down their student loan debt. And for them, that just might be the employee benefit that matters most.