College graduates are entering the workforce following a senior year that was vastly different than what they had expected, thanks to the pandemic.
As employers welcome the Class of 2021 to their workforce, naturally there are questions about how best to understand their unique situation and frame of mind.
Working with the social impact education innovator EVERFI, AIG Retirement Services conducted a survey of over 20,000 college students from October 2020 to May 2021 to explore financial attitudes, behaviors and plans. The next members of the workforce will be bringing a mixed bag of financial experiences to the job.
Turning good intentions into action
College seniors went through more than a year of stress and strain because of COVID-19. Encouragingly, our study found many responding to this challenge with resilience and a healthy amount of pragmatism.
College students said they intended to take important positive financial steps within the next year, with over two in five (43%) expecting to start saving for retirement and marginally more (44%) planning to build up an emergency savings fund.
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Even with these solid numbers, employers would do well to remember that good financial behaviors rarely happen on their own. Gentle encouragement and solid employee communications can be critical in transforming the best of intentions into real action.
Here is where there is an opportunity to fine-tune the onboarding process with your newest employees in mind. We typically suggest to employers that they consider prioritizing retirement planning, since starting out early can offer significant rewards for your employees’ financial future. Additionally, we believe communications around financial goals and responsibilities should take a relatively simple approach, as many in this cohort will be encountering these ideas for the first time.
Some employers offer access to a financial professional as part of their benefits program, but college graduates just entering the workforce might not consider this perk something they are ready for. Employers who do provide this benefit may want to encourage their employees, regardless of age, to take advantage of it.
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It can be very beneficial to make the right financial moves early in your career, and a professional can help. More than that, a conversation with a financial professional can help widen your view and have you thinking more expansively about your goals and objectives.
Some concerns to watch
While our study found many positives, we saw concerning behavior, too. College graduates appear to be entering the workforce with some reliance on credit cards, and this could suggest underlying financial stress or be a warning sign of future financial troubles.
Nearly half (48%) of the college students we surveyed have a credit card, and more than half (53%) of those with a card are charging to two or more Further, 40% are carrying more than $1,000 in credit card debt, and 38% do not expect to pay their entire credit card bill each month.
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Employers have a real opportunity to help by delivering employee education with the aim of raising financial literacy. Some college graduates entering the workforce may need assistance around the basics of credit card bills and interest, and your employee communications can include personal finance education to go along with explanations of benefits.
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Another area of stress for younger employees typically is student loan debt, and our survey found that nearly half (44%) of college students will try to qualify for a student loan forgiveness program. Many of our clients are employers in the public service and non-profit sector, and the forgiveness program designed for their employees — the Public Service Loan Forgiveness program — is known for being complex and difficult to navigate. That’s why we have engaged Savi, a social impact technology firm, to help non-profit and public service workers overcome the hurdles and take control of their student loans.
Taking the financial wellness approach
The college student survey we conducted with EVERFI shows how employers have many different avenues to help get their newest employees headed in the right direction as they begin to build a solid financial foundation. In line with that, workplace benefits plans are increasingly being designed around the concept of financial wellness, creating a broad set of programs aimed at raising financial health.
College graduates entering the workforce this year should reinforce the movement to financial wellness, and employers can help establish a solid foundation by providing the tools and education to help them reach their financial goals.
