Student loans can be a
Maggie Ruvoldt, CHRO at LEARN Behavioral, an
"There's been a lot of misinformation about the student loan space over the last decade as part of the financial wellness puzzle, because presidential administrations keep changing the policies and student loans were paused for four and a half years," Sealy said during the panel discussion. "So if you weren't hearing about it as an employee concern, there's a good reason: It wasn't actually a concern. Now, student loan payments have resumed for the first time in nearly five years, and it is a major pain point for your employees."
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Current student loan debt challenges
According to the Education Data Initiative, 43.5% of Gen Zers over the age of 18 and nearly 40% of millennials carry student loan debt. And older generations haven't been left unscathed: Thanks to long payoff schedules, financial hardship and paying for their children and grandchildren's education, almost 22% of Gen X and 10% of baby boomers also have student loan payments to factor into their monthly bills. Gen X in particular carries the highest average debt of all groups at around $44,000.
Paying these balances down is proving difficult, especially for the younger generations. Sixty-four percent of Gen Z and 47% of millennials make payments under $200 per month, compared to Gen X and boomers, 30% of whom pay at least $500 monthly. In addition to accruing a massive amount of interest over the years spent paying these debts down, many borrowers have had to pause payments altogether. New data from the Department of Education shows that more than 5 million people are currently in default on their federal student loans and another 4 million are in late-stage delinquency, meaning at risk of default.
In summary, every group within a workforce can benefit from a student loan assistance benefit. Ruvoldt saw this need among her employees, and chose Summer to help fill it. Gone are the days when employers' contribution to employee financial wellness stops with a retirement benefit — it's more complex than that, she says.
"What I was seeing happen for us in particular, and I've seen this in other businesses that I've been in, is the burden of student loans," Ruvoldt said. "It's a stressor that's impacting people every day. They're worried about making that payment along with everything else they need to do and the dreams they have for their lives — buying homes as an example. [Providing help is] an imperative for employers."
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Less employee debt is better for business
By bringing Summer's solutions in as a benefit, employees can see if they qualify for loan forgiveness, restructured payment plans, and other options that help make repayment easier. They also get access to a personal advisor as well as educational tools that can assist with financial questions and goals. For Ruvoldt, this offering is a way to ensure that employees have access to expert guidance for personal peace of mind, but it also benefits the LEARN, where the staff is made up in large part by highly-credentialed specialists, clinicians and educators — prime candidates for student loan debt.
"We work with children every day — children with autism or a variety of special needs — and when I have an employee in front of a child every day, I want their 100% focus to be with that child," she said. "If they are worried about something else, including their financial wellness, that's occupying some amount of their brain all day long. We [also] wanted to be able to attract really great talent in a very competitive market. When it comes to the benefits space, this was a way for us to really say, 'We see the effort and the amount of money that you have put into gaining this education that you needed to do this work, and we want to help you with that.'"
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As the cost of college goes up, student loan debt will only grow, and the need for assistance options will rise accordingly. Summer's analytics show employer partners see a reduced turnover of 20% and a 35% higher adoption rate than those of other voluntary benefits. Employees see an average savings of $40,000. This type of data is what sets student loan assistance access apart from other financial wellness offerings, said Sealy — there's a clear ROI for organizations and money back in employees' pockets.
"HR leaders are monitoring the challenges their employees are facing, and [we're] mindful that they don't have all the time in the world," Sealy said. "[With Summer,] they [can] bring in a solution that is set it and forget it, and where there's guaranteed results that they can highlight and show to their CFO, COO and CEO. This is solving a real pain point for employees, and it's directly tied to employee performance and loyalty and longevity of those employees."
