We have a student debt crisis in the United States. Student loan debt has quintupled since 2004, bringing the total to over $1.3 trillion. It is second only to mortgage debt.
As a result, many workers are delaying retirement savings. One study found that only one‑third of millennials are contributing to an available 401(k) plan. Who can blame them, when student loan debt is an immediate obligation and other life goals such as buying a home or starting a family are being delayed because of it. Retirement seems far off in the distant future.
But it is not just millennials. Some reports indicate that 35% of student loan debt is held by people over age 39. And many parents have taken out loans of their own to help their children through college.
So what can employers do? Taking a proactive approach to helping employees pay down student debt can attract and retain employees and can further benefit them by allowing them to save more and earlier for retirement. But how?
Here are four programs an employer can implement, from the easiest and perhaps least desirable, to the most complex but perhaps most attractive.
Any of these approaches could be a win-win both helping the employee to pay his or her student debt and giving the employer an edge in attracting and retaining great employees in this age of overwhelming student loan debt. Please contact your Warner Employee Benefits attorney to discuss further.
