Can employers afford to not offer student loan assistance?

Employer-sponsored student loan assistance can help employers earn high marks in more ways than one

Whether you employ five or 5,000 employees, the chances of your workforce being impacted by student loan debt are the same: very likely. Today, one in five American workers¹ are saddled with student loans totaling an astronomical $1.5 trillion². In fact, student loans have graduated to being the second largest class of consumer debt, trailing only mortgage debt³.  

To attempt to curb this problem, American workers are turning to employers for relief through employer-sponsored student loan assistance programs. Let’s take a closer look at employer-sponsor student loan assistance and how it can help create a win-win for the employer and employee.

Student loan debt: one problem, all generations

Between parents helping their kids pay for college and students taking out their own student loans to attend school, student loan debt has left no generation untouched.

1. Centennials (up to age 24) 7 out of 10 new college graduates enter the workforce with an average of $37,172 in student loan debt.²
2. Millennials (age 25-39) 80% report student loan debt makes it difficult for them to meet other financial goals³.
3. Gen X (age 40-54) carries a staggering $548 billion in student loan debt⁴.
4. Baby Boomers (age 55-74) 31% stopped saving for retirement to focus on paying off student loans⁵.

Student loan assistance can help employees save for retirement

Employees who have student loan debt are often deeply conflicted about whether to focus on paying off student loans or saving for retirement. According to Voya’s proprietary research, 98% of employees with student loan debt say they’d likely save more for retirement if they had their debt under control⁶. At the same time, a sobering one in three Baby Boomers put saving for retirement on hold because of student loan debt⁷.*

In addition to potentially causing delayed retirement, student loan debt is a significant contributor to employee financial stress, which amounts to more stress than all of the other factors combined. And it impacts virtually every facet of their life, including their on-the-job performance and even holistic wellbeing.

Employer-sponsored student loan programs can help create an employer advantage

Currently, only 4% of employers² offer any type of student loan plan to employees. Because of the range of potential benefits to be gained by employers through student loan assistance programs, you can potentially create a competitive advantage for your company.  Here’s how:

1. Gain the recruiting edge. Considering 93% of employees with student loans would take advantage of a sign-on bonus to help with student loan payments, offering some type of student loan assistance can help companies attract top talent⁹.
2. Bolster employee retention. 86% of employees aged from 22 to 33 suggest they would commit to an employer for five or more years if they helped them pay off their student loan; while 92% said they would take advantage of the program if offered⁹.
3. Improve productivity. Almost half report that personal finances distracted them an average of three or more hours a week while working¹. Based on a 40-hour work week, that equates to 7.5% of lost productivity.  
4. Help keep your employees physically and mentally healthy. Financial stress can take a real toll on the physical and mental wellness of employees. This may increase their utilization of health insurance and possibly increase the number of sick/vacation days your employees take. 
5. Customize an employer-assistance program. When it comes to offering employer-sponsored student loan programs, employers have a range of options. It’s about choosing the right partner who will provide the most savings to employees — whether it involves the employer contributing or not.

Download the Voya Perspectives paper:

The real costs of student loan debt—for employees and employers