As employers navigate the ongoing crisis caused by COVID-19, many are reevaluating their employee benefits packages and in some cases, reducing the benefits that employees count on. But as employers work to manage their bottom line, there are low-cost, high-impact benefits they can – and should – consider.
When determining which benefits will be the most useful to employees, employers should consider what causes the most stress. For example, employees who are worried about their financial health often are less productive when they are at work. Nearly 78% of employees with high financial stress say that they are distracted by that stress at work.
As a result, plan sponsors and benefit administrators may want to consider one of the biggest financial hurdles facing employees, especially in the nonprofit space: student debt. Across the United States, student debt is at the highest it’s ever been, reaching $1.6 trillion this year.
The 2020 TIAA Nonprofit Student Debt Survey found that student loans cause at least some stress for more than 61% of those who carry it. In fact, 75% say they associate negative feelings with their loans, including 41% who feel frustrated, 34% who feel hopeless, 26% who feel angry, and 22% who feel ashamed.
The burden of paying off student loans can negatively impact other areas of financial management. Student loan repayment can be a financial roadblock for many and even under normal circumstances, borrowers may find it difficult to consider saving for retirement. A large majority of American adults (84%) who are currently contributing to student loan payments report that student loans are negatively impacting the amount they can save for retirement, according to a 2019 survey by the MIT AgeLab and TIAA. In TIAA’s recent Financial Resiliency Survey, 40% of employees aged 25-39 say they want education, tools or advice to help manage student debt.
In response to this, TIAA joined forces with social impact startup Savi to make it easier for nonprofit client institutions to offer meaningful student debt relief services to their employees. TIAA and Savi conducted a pilot of the solution from July 2019 through March 2020 with seven nonprofit institutions, four in higher education and three in healthcare. Within that period, employees who signed up for the solution were on track to save an average of $1,700 a year in student debt payments. Some employees’ payments were cut in half. In addition, employees had an average projected forgiveness of more than $50,000 upon successful completion of 120 months in the PSLF program.
Student debt management programs also boost employee retention. The 2020 TIAA Nonprofit Student Debt Survey also found that tools like Savi improve retention, positivity, and loyalty toward employers. If Savi were offered by their employer, 82% would feel more positive about their employer. Additionally, 78% say it would impact their likelihood to continue working for their current employer for the foreseeable future.
As we all navigate the impact of COVID-19 on the U.S. economy, it’s critical to prioritize financial wellness for employees. Student debt is always top of mind for employers, but COVID-19 has created an environment that showcases the increasingly large number of financial burdens on employees. As student debt continues to be a major distraction for employees, providing a tool to help ease the burden may urge them to stay in a position longer or increase productivity.
There has never been a more important time to provide employees with the resources they need to manage student loan debt while also supporting their retirement planning. By providing an impactful student loan benefit and other financial wellness tools, employers can begin to improve the overall financial wellbeing of their employees.
