Individuals With Student Loan Debt Are Facing “Unprecedented Financial Challenge,” New Research Finds
October 17 2017 - 9:00AM
Business Wire
90% With Outstanding Student Loan Debt Say A
Student Loan Repayment Benefit Would Positively Impact Their View
Of An Employer
Stress On Borrowers Is Creating A New
Opportunity For Employers To Provide Relief By Offering A Student
Loan Repayment Benefit
Significant student loan payments are creating an “unprecedented
financial challenge” for borrowers, but the issue also presents
employers offering a student loan repayment benefit an opportunity
to provide relief and gain a clear advantage in recruiting
employees, according to new research by the consulting firm Oliver
Wyman.
The analysis, commissioned by Gradifi, a leader in student loan
repayment benefit programs for U.S. employers, for the first time
revealed the significant mismatch between what most employers are
offering in a benefits package and what younger workers want.
The research, based on a survey of more than 3,000 working
professionals across the U.S., found that 45% of the respondents
with outstanding student loan debt consider a student loan
repayment the single most compelling employee benefit among six
potential options, including additional retirement and health care
contributions.
The analysis also quantified the high level of anxiety
associated with student loan debt. Eighty percent of the working
professionals surveyed with student loan debt say it is a source of
“significant” or “very significant” stress.
“People with student loan debt are carrying a serious financial
and emotional burden,” said Tim DeMello, Founder and CEO of
Gradifi. “The pressure of making big monthly loan payments is
taking its toll in terms of stress, housing affordability and
quality of life. For employers, the research makes crystal clear
that a student loan repayment benefit can create a decisive hiring
advantage in recruiting highly skilled workers, while offering
much-needed relief to borrowers.”
A student loan repayment benefit has become a higher priority
than additional employer retirement contributions and a clear
differentiator for employers offering a solution. Today, only 4% of
employers currently offer student loan repayment assistance as a
benefit.
For an employee with a loan balance of $26,500 – the median
amount borrowed for a bachelor’s degree – a $100 per month employer
contribution for a loan at 4% over 10 years would save over $10,000
in principal and interest. This employer contribution would result
in a 30% reduction in total payments, and the loan would be paid
off three years faster.
Gradifi’s SLP Plan™ benefit enables employers to make a monthly
contribution to pay down an employee’s student loan debt. Employers
can also extend that benefit to parents who have borrowed to pay
for their children’s education.
Among the report’s other key findings:
- 58% of those with outstanding student
loan debt said they prefer their employer help them pay down their
student debt rather than make additional contributions to their
retirement savings.
- 90% of those with outstanding student
loan debt said a student loan repayment benefit would positively
impact their decision to accept a job offer, to recommend an
employer or to stay at their current employer.
- High student loan payments are making
it more difficult to afford housing in many urban centers, where
jobs are located. The typical loan payment for a graduate with a
bachelor’s degree is $265 a month. For a medical school graduate,
it’s $1,600 a month.
Research Methodology
The study was commissioned by Gradifi and fielded by independent
leading global management consulting firm Oliver Wyman. The study
included a consumer survey of 3,002 American households in May
2017. The survey focused on working professionals that had a
bachelor’s degree or higher, were between the ages of 18-50, and
were either employed or seeking employment.
About Gradifi
Gradifi is a best-in-class, student loan repayment solution
addressing the nation's student loan problem. Gradifi helps
organizations attract and retain talent by enabling employers to
make direct contributions to their employees’ student loans and
accelerate the pay-off of the debt. Endorsed by the American
Bankers Association’s Corporation for American Banking, Gradifi
works with more than 150 companies across the U.S. To learn more,
visit www.gradifi.com or twitter.com/gradifi.
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version on businesswire.com: http://www.businesswire.com/news/home/20171017005611/en/
For GradifiElizabeth Yekhtikian,
617-686-9541gradifi@inkhouse.com
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