How Companies Can Help Employees With Student Loan Debt
Special to The Truth
After paying monthly student loan minimums, many Americans
have just enough to cover basic living expenses, which means
that when unexpected expenses arise, they often end up
defaulting on their student loans.
It’s no wonder that student loan debt is a top financial
stressor for so many. There’s good news, though. Not only
can employers help employees with student loan debt, but
doing so is in everyone’s best interest. Here’s how:
Reducing Anxiety
A growing number of employees are entering the workforce
with student loan debt. About 43 million adult Americans
carry a federal student loan, owing $1.5 trillion in federal
student loan debt, and Americans also owe an estimated $119
billion in student loans from private sources not backed by
the government, according to the Center for American
Progress.
Experts say that this debt is causing anxiety and a
distracted workforce, with many people spending hours of
their workday wondering how to meet financial commitments. A
majority of borrowers with student loan debt report being
worried about paying off their student loans, according to
research reported by Phy.org from the University of
Missouri, research which also found a strong link between
student loans and mental stress for borrowers.
According to research, those with student loans say that
getting help with refinancing or repaying their loans would
ease their stress so they can focus on their job. When such
assistance is offered, employees appreciate that their
employer cares about their financial well-being, and
ultimately becomes more engaged and involved in the success
of the business.
Refinancing Education
Some may wonder whether refinancing is worth their time and
effort, but research shows that many people who take out
student loans have a high interest rate, and on average,
borrowers take 20 years to pay off their student loan debts.
Instead of continuing to pay a high rate for the lifetime of
the loan, employers can work with education benefits
providers, such as BenefitEd, to direct employees toward
private refinancing options such as U-fi. Even saving a
small amount each month can substantially lower the total
cost paid over the life of the loan.
Employees are likely to appreciate having the option to
refinance loans as well as receive education and financial
advice from their employers, say experts who name supporting
employees’ financial health as a great way to increase
employee loyalty and engagement.
Avoiding Loan Default
Nationally, the default rate on student loans is increasing.
In 2018 alone, student loan delinquencies amounted to over
$166 billion.
Missed payments can affect someone’s credit score for years.
It can also affect employment opportunities as some
employers are now checking candidates’ credit scores before
making job offers. If employees receive advice on
refinancing their student loans or receive repayment
assistance from employers, they’ll be more likely to make
their monthly payments and less likely to deal with the
consequences of a poor credit score.
To learn more about how employers can support future and
current employee financial needs, visit youbenefited.com.
There are many ways companies can support their employees
who are currently managing student loans, and when they do,
experts say they’ll have a happier, healthier and more
grateful workforce.
Courtesy StatePoint
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