ABBOTT PARK, Ill., May 15, 2019
/PRNewswire/ -- Student loan debt – affecting 1 in 4 Americans
and topping $1.5 trillion – is one of
the most pressing concerns of students graduating college this
spring.
Nearly 70% of graduates today have taken out a loan – and a
recent survey of college students shows that 9 out of 10 of them
are on the hunt for a company with a student loan perk. The survey
of 2,594 U.S. adults by YouGov on behalf of Abbott (NYSE: ABT), the
global health technology company, also revealed:
- 62% of employed adults with student loans would consider
switching companies to gain a student loan relief employee
benefit
- 64% of all adults with student loans say finding a company that
offers a student loan benefit is important
- 42% of adults with student loans aren't saving for retirement
due to their student loans, including almost half (48%) of people
with student debt ages 18-34 and over a third (34%) of those 55 or
older
- 70% of Black and 76% of Hispanic Americans with student loan
debt say finding an employer with a student debt employee benefit
is important – almost half of each group (49% and 47% respectively)
say it's "very important"
"We've already had people join our company because of this
student loan benefit since launching it last year," said
Steve Fussell, executive vice
president of Human Resources, Abbott. "We knew student loans were
weighing on our employees, and on the minds of candidates, but what
we learned through this survey is this issue matters even more than
we knew."
A Recent Grad's Perspective
Harvir Humpal, 24, joined the
company in Pleasanton, Calif.,
late last year as a development quality engineer. While he had his
pick of companies to choose from (he received three offers from
medical device companies after graduating with his master's in
biomedical engineering), he chose Abbott in part because it offered
a benefit to help him pay off his nearly $60,000 in student loans about four years faster,
saving more than $7,000 in interest –
while also saving for retirement.
"It helped me understand that Abbott really cares about new
graduates and appreciates that this is a systemic issue," Humpal
said. "A lot of my friends also have between $10,000 and $100,000 in student loans, which affects every
aspect of our lives."
Abbott's Freedom 2 Save program enables Humpal and hundreds of
other employees to divert the 2% minimum contribution they'd
normally have to contribute to their 401(k) accounts to receive a
5% match to pay off their loans faster. When they show that they're
using at least 2% of their eligible pay to whittle down loans, the
company kicks in with a 5% contribution to their 401(k) accounts –
without them having to contribute a dime.
An Employee Who Switched
Shannon Ramirez, 42, one of
Abbott's learning and development supervisors based in Minnetonka, Minn., didn't go to college right
away when she was younger, but after her son was born in 2009, she
was inspired to start chipping away at classes to earn her
organizational leadership degree. Along the way, she's picked up
more than $50,000 in student
loans.
Abbott's Freedom 2 Save benefit and tuition assistance program
are big reasons why she decided to leave her recruiting firm and
join Abbott. Tack on meaningful work helping employees
navigate new jobs, and she said she hopes to have a long career at
Abbott.
"I heard about Freedom 2 Save through an article on LinkedIn and
immediately thought 'Oh my gosh this could change my life,'"
Ramirez said. "I put my heart and soul into everything I do, so to
have my commitment to education clearly valued by Abbott makes me
proud to be here and even more motivated to keep going."
Better than Cash – an Investment in Employees
Employees with $40,000 in debt
would pay off their loans, on average, three years sooner by
diverting an additional 2% of their eligible pay towards debt
repayment. If they used Freedom 2 Save for 10 years, with a
starting salary of $70,000 (and 3%
annual merit increases and 6% market return), they would also
accumulate about $54,000 in their
401(k) plan account, without making any contribution of their
own.
About 4% of companies today offer a cash reward to help
employees with student loans – and one-third of employers are
expected to follow suit by offering some type of student loan debt
program, according to the Employee Benefits Research Institute.
"Companies cite a number of reasons, but the top ones are
employee retention and reduced employee stress," said Lori Lucas, president and CEO of the Employee
Benefit Research Institute.
Abbott found its structure to be more valuable for employees
than cash rewards in the long run because the investment is worth
more over time, as it grows tax-deferred.
"The program pays for itself," Fussell said. "Our employees are
happier, more engaged, more productive and they stay longer. That's
good business."
YouGov Methodology:
The total sample size was
2,594 U.S. adults aged 18 and older. The responding sample is
weighted to the profile of the sample definition to provide a
representative reporting sample. Interviews were conducted online
in December 2018.
About Abbott:
Abbott is a global healthcare leader that helps people live more
fully at all stages of life. Our portfolio of life-changing
technologies spans the spectrum of healthcare, with leading
businesses and products in diagnostics, medical devices,
nutritionals and branded generic medicines. Our 103,000 colleagues
serve people in more than 160 countries.
Connect with us at www.abbott.com, on LinkedIn at
www.linkedin.com/company/abbott-/, on Facebook at
www.facebook.com/Abbott and on Twitter @AbbottNews and
@AbbottGlobal.
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SOURCE Abbott