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.
A few quick facts
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 they may have in the future.”
Why is this happening?
Some seasoned professionals like to wax poetically about how they worked their way through college, and suggest that current generations should simply suck it up and do the same. But times have changed dramatically. And so has the cost of higher education.
According to The College Board, a “moderate” college budget for an in-state public college for one academic year averages $24,610. And the moderate budget for one year of private college averages $49,320. Go ahead. Try coughing up that kind of cash working at the soda fountain after class. We’ll wait.
The new realities of paying for college are stark. The average cost for a 4-year public college education has increased 81% in the past 10 years. Go back 20 years and 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 around 40%. At this point, putting yourself through college without help or loans isn’t really a thing. Or as the kids say, “I just can’t even.”
The result of this shift? Today’s average college graduate enters the workforce with over $37,000 in loans.
But does this really affect employers?
Let’s see. Are you looking for people who can help you achieve your company goals, mission and vision? Do you want to hire employees who are confident, productive, and focused on what they can bring to the table?
This is hard to do if your pool of candidates is barely keeping their heads above water.
- 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.
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. In the race for talent, this could give you a significant advantage.
Empower your employees, empower your business
Surveys indicate that only about 4% of employers currently offer student loan repayment benefits. Why not put together a benefits program that helps your employees pay for the skills and training you’re looking for?
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.
As an employer, it’s in your best interest to put together a program that attracts top talent. Offering financial stability is a great place to start.
At Raffa Financial, we provide long-lasting benefits strategies to take care of your business and your employees. Located in Rockville, Maryland, we identify and manage complex employee benefits challenges for businesses all over the greater Maryland, Virginia and Washington, DC area.
Photo by Bob Venezia