With over 45 million Americans shouldering some form of student debt, employees are increasingly looking to their employers for support. Given this trend, it may be time to consider a new addition to your workplace benefits package.
Forty-five percent of workers consider student loan repayment assistance the single most important employee benefit, even ranking it higher than additional retirement and health care contributions. Yet, only 8% of employers currently offer student loan repayment assistance.
Recognizing and addressing this gap is crucial for employers. By including offerings like student loan repayment assistance in your workplace benefits, you can help increase employee satisfaction and loyalty. Plus, as many borrowers resume payments on their federal student loans, now is a great time to support your employees where they need it most.
In this article, we’ll discuss how student loan debt impacts employee well-being—and explore the workplace benefits designed to help.
Understanding the Impact of Student Loan Debt
The average student borrows over $30,000 to pursue a bachelor’s degree, and as the cost of college rises, students and their families are borrowing more. When we look at the data year by year, there’s a clear trend: students are graduating with more debt than ever before.
Source: Hanson, Melanie. “Average Student Loan Debt by Year” EducationData.org, July 30, 2023, https://educationdata.org/average-student-loan-debt-by-year
The burden of student debt is far-reaching—particularly for women and minorities, who generally have higher amounts of student loan debt. Two-thirds of the country’s student loan debt is held by women, and Black and African American college graduates owe, on average, $25,000 more than White graduates.
Fresh graduates are not the only ones impacted by student loans. Seasoned professionals, too, are still making payments on their student debt. Twenty years after stepping into their college classrooms, half of student borrowers still owe $20,000 each on outstanding loan balances.
Long-term debt, like student loans, can keep borrowers from achieving significant financial milestones such as building a retirement nest egg or buying a home. For many, this sense of delay becomes a source of stress. In fact, 54% of Americans have reported mental health issues due to the stress of student debt.
How Financial Stress Influences Workforce Wellbeing
Of course, financial worries don’t disappear when an employee walks in the office door. Workers are feeling the effects of student debt every day—and it’s impacting their work and wellbeing.
According to a PwC survey, 35% of employees report that issues with personal finances have been a distraction at work. Nearly half (49%) of those who are distracted by their finances at work say that they spend three hours or more at work each week thinking about or dealing with issues related to their personal finances.
Moreover, these financial concerns don’t just affect productivity; they can also weigh heavily on employees’ overall morale and job satisfaction. This not only affects their personal growth but can also impact the company culture as a whole. Offering support in managing student debt can enhance your employees’ overall sense of well-being and loyalty to your business.
Student Loan Repayment Assistance as a Workplace Benefit
As employee priorities evolve as a result of rising student loan debt, workplace benefits are evolving along with them. According to data from Handshake, the percentage of job descriptions on the platform mentioning “student loan repayment programs” has more than doubled since 2019.
Adding student loan repayment assistance to your benefits package can be a great way to show that your business values its employees. This not only helps recruit top-notch candidates but also fosters a sense of loyalty among your existing team. According to an American Student Assistance (ASA) survey, 86% of employees would commit to a company for five years if the employer helped pay down their student loans.
Vestwell, for example, offers Student Loan PayDown, a workplace education product that enables employers to make direct contributions to their employees’ student loans. This offering enables employers to support their employees by making direct contributions to their student loans. It offers tangible relief for your team by helping them pay down their debt faster.
It’s clear that the student loan debt crisis is impacting workers’ lives, both outside of work and in the office. By incorporating student loan repayment assistance into your workplace benefits package, you can align your offering with the evolving priorities of your employees.
To learn more, visit vestwell.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.