And their jobs aren’t helping them with their debt, though some are starting to
We spend the majority of our time after college just trying to find work in our field that will pay our bills. One of the first bills is… paying for the education we just got.
But student loan debt is only increasing and a survey from IonTuition says companies could be doing their employees a huge service if they offered better some — or sometimes, any — student loan repayment assistance.
According to the survey, almost 90 percent of young employees would like their companies to match their payments much like they might match 401(k) contributions. Unfortunately, even basic financial advice isn’t even available at most companies.
More than half of respondents also want student loan counselors and to look at their repayment options online. All the benefits the study asked about include:
- One-on-one student loan counseling: 64.1 percent
- Online platform: 62.2 percent
- Student loan counselors: 56.8 percent
- Repayment hotline: 48.4 percent
- Educational workshops: 32 percent
IonTuition says only four percent of employers currently offer student loan repayment contributions as a benefit. The good news is that it’s predicted to increase to 20 percent by next year.
A little help here, please
Before you got your federal loan for college, there was a requirement that lenders had to provide entrance counseling before letting you accept them.
Do you remember when you applied for student loans to get into college? Most don’t, apparently: 51 percent said they never received such counseling. It could be that we never got it, but more likely we don’t remember because it wasn’t very helpful or obvious. Either way, two-thirds of respondents have had issues paying back their debts.
So what if you’re struggling to repay your student loans back? Seventy percent aren’t even sure there are options for them if they can’t, and 30 percent admit to not knowing what their options are.
Could your employer help? You should find out, because more employers are looking at providing student loan benefits alongside more traditional options like a 401(k) or health insurance. But almost 80 percent of respondents say their employer doesn’t offer any type of student loan repayment help, or don’t know if there are offers available to them.
“Helping employees relieve financial stress is a proven option for building company loyalty, enhancing productivity and improving morale,” IonTuition says. “Even something as simple as providing student loan management tools and access to one-on-one counseling can be a great step in the right direction.”
What’s credit got to do with it?
High interest rates are part of the problem — you’re often paying so much interest you’re never sure when you’re going to start paying the actual original loan balance down. Some repayers look to refinancing to lower their interest rates — but that often means moving into a new private student loan and losing the benefits of having a federal loan, like flexible repayment options. It also requires having good credit.
“Fewer than half of respondents surveyed —46.8 percent — have a credit score above 680, which is often regarded as the ‘magic number’ to qualify for highly-beneficial, lower interest rate loans,” the survey says. More than that, 14 percent of respondents don’t even know what their credit score is.
Almost 40 percent of those with scores below 680 think they qualify for student loan refinancing, but: “most refinancing programs currently available as employee benefits would classify these employees as ineligible to participate.”
Companies that require employees to have certain degrees need to understand that student loan debt usually comes with that requirement. Limiting assistance to your employees — even if they meet every other qualification — means you’re only getting a small number of viable options. Great credit score does not necessarily mean a great worker.
“Student loan refinancing is a benefit that can only be made available to a narrow subset of most business’s staff as a result of credit score requirements. Among these employees, only those who are willing to lose their federal student loan repayment protections in favor of lower interest rates are likely to participate,” the study says. “At many companies this may create a negative environment wherein only those employees least likely to need the benefit are eligible to take advantage of it.”
Article last modified on March 3, 2017. Published by Debt.com, LLC .