If you’re an established business owner or career professional, you may think employee student debt doesn’t affect you. Unfortunately, you’d be wrong.
Because when something affects your employees, it affects you, too.
What’s the problem?
As parents, mentors, business owners, and hiring managers, we’ve told young people that they need a college degree to get ahead. And this may be true. College graduates will earn 84% more over their lifetime than those with only a high school degree. They will also face much lower rates of unemployment.
But this doesn’t tell the whole story.
In a recent American Student Assistant survey:
- 35% of respondents said that they found it difficult to buy daily necessities because of their student loans
- 62% said they have put off saving for retirement or other investments
- 53% responded that their student loan debt was the deciding factor, or had considerable impact, on their choice of career field
- 47% said they either strongly or somewhat agreed with the statement that their “need to pay student loan debt is hampering my ability to further my career.”
One ASA survey respondent commented, “I need to have two jobs because of my student debt, and I cannot take employment opportunities that will not make enough money, regardless of the potential that they may have in the future.”
Back in my day…
Guess what? We’re not back in your day. Or my day. Or any other day.
We’re in the here and now. Where, according to the College Board, the “moderate” college budget for an in-state public college for an academic year averages $24,610. And the moderate budget at a private college averages $49,320. Try coughing up that kind of cash working at the soda fountain after class. I dare you.
In 2007, the average cost for a 4-year public college education was $13,589. For those of us without math degrees, that’s an 81% increase-- just in the last 10 years. Want to go back 20 years? You’re looking at a 230% increase.
But surely the Federal minimum wage has kept up, right? Wrong. Over the last 20 years, the federal minimum wage has gone from $5.15 to $7.25 per hour, for a total increase of not quite 41%.
At this point, putting yourself through college without help or loans isn’t really a thing. Today’s average college graduate enters the workforce with over $28,000 in loans.
Having worked in a University Career Center, I can verify this anecdotally. I regularly saw students preparing to graduate with debt ranging anywhere from 10 to 80 thousand dollars. These weren’t lazy slackers, either. These were smart, hardworking students who held down one, two, or even three jobs during school.
Just the kind of industrious job candidates you’d want to hire.
Yes, this affects you
If you’re looking for people who can help you achieve your company goals, mission and vision, you cannot afford to hire employees who are focused on their personal finances rather than on what they can bring to the table.
- When staff members are constantly stressed about their financial situations, it leads to poor health outcomes and higher rates of absenteeism.
- When young talent can’t afford to take jobs with potential for growth or further their careers, this impacts your ability to recruit and retain talent.
- When candidates take a job just for the paycheck and aren’t truly invested, this leads to low engagement and lack of motivation
- When people are stuck in jobs they don’t want, it impacts employee morale, performance and productivity.
- When employees are unhappy with their career situations, it leads to high turnover. Not only that, these folks often start looking for other work— often on the clock.
Interestingly enough, it’s not just only younger workers who have issues with student debt.
A report from the Federal Reserve Bank of New York found that 17% of the outstanding student loan population is made up of borrowers over the age of 50. And according to a report by the Government Accountability Office, approximately 3% of households headed by someone 65 or older carry student loan debt.
And get this: older Americans with unresolved student debt are discovering that their Social Security checks are being garnished in order to pay off defaulted student loans. Imagine that for a second, will you?
Student loans are preventing your employees from getting married, having kids, buying cars or houses, and saving for retirement.
As one ASA survey respondent put it:
“I am forty years old. My life hasn't even started. I only have $21,000 in retirement savings, and $91,000 in student loan debt. I will be living on ALPO when I retire. I probably won't be able to retire.” – ASA survey respondent, 2015
Help your employees help you
Today’s debt-ridden college students are tomorrow’s innovators, leaders, employees, and customers— if they can afford to be.
As an employer, you have the power to make a difference for your employees and your business. Here are a couple of ways you can do just that.
Support student scholarships and grants - You benefit from a highly educated workforce. Why not invest in keeping that talent pipeline open? Not only will you help encourage students to get degrees, you’ll help them come out with less debt and more excitement about the future.
Provide Student Loan Repayment Benefits - This is quickly becoming one of the most desired employee benefits. And yet only about 4% of employers are offering it. If you’re one of them, you’re going to have a big recruiting advantage. Put together a program that helps your employees pay for the skills and training you’re looking for.
If you’re feeling skeptical, check out this compelling data:
Data from LIFE DELAYED: The Impact of Student Debt on the Daily Lives of Young Americans. American Student Assistance survey, 2015 Edition
You can make a difference
With all other things being equal, 76% of ASA survey respondents said that if an employer offered assistance with student loan repayment, it would be the deciding factor or have considerable impact on their choice to take that job.
Surveys indicate that only about 4% of employers currently offer student loan repayment benefits. Why not lead the charge and be one of them? In the race for talent, this could give you a serious advantage. And land you some seriously awesome employees.
Photo by Alphaspirit