AN AFLAC WHITEPAPER. Studying up on Student Loan Assistance Attract and retain talented employees with student loan repayment and planning

Transcription

1 AN AFLAC WHITEPAPER Studying up on Student Loan Assistance Attract and retain talented employees with student loan repayment and planning

2 STUDYING UP ON STUDENT LOAN ASSISTANCE Help paying off education debt is one of the hottest employee perks 2 When it comes to big-ticket purchases, the most expensive item for many Americans is a new home. But there s another high-cost item that results in years even decades of monthly payments: a student loan. According to the U.S. Federal Reserve, outstanding student loan debt in this country has reached a staggering $1.4 trillion. 1 The debt has a surprising effect: Although traditional belief holds that college opens the door to higher-paying careers that make it easier to afford a home, the opposite is actually true. Research indicates student loan debt is tied to a lower rate of home ownership, car ownership, and even to the ability to move out of a parent s garage or basement. 2 THOSE WITH SIGNIFICANT STUDENT DEBT ARE MUCH LESS LIKELY TO OWN A HOME AT ANY GIVEN TIME THAN THOSE WHO COMPLETED THEIR EDUCATION WITH LITTLE OR NO STUDENT DEBT. William Dudley President of the New York Fed

3 STUDYING UP ON STUDENT LOAN ASSISTANCE Help paying off education debt is one of the hottest employee perks 3 The Federal Reserve s latest survey reveals that: 53 percent of Americans who earn bachelor s degrees acquire at least some debt in doing so. The mean amount owed by those who borrow to pay for their educations is $32,731, $$$ and the monthly cost of those loans is significant: an average of $ THE BURDEN OF STUDENT LOANS GOES BEYOND INDIVIDUALS AND THEIR FAMILIES, HOWEVER: IN RECENT REMARKS, U.S. FEDERAL RESERVE CHAIRMAN JEROME POWELL SAID INCREASING LEVELS OF STUDENT LOAN DEBT COULD ACTUALLY SLOW AMERICA S ECONOMIC GROWTH. AS THIS GOES ON AND AS STUDENT LOANS CONTINUE TO GROW AND BECOME LARGER AND LARGER, THEN IT ABSOLUTELY COULD HOLD BACK GROWTH, HE SAID. Of course, not everyone who owes money on a student loan is in a financial position to dig out of debt: 19 percent are behind on their payments. What s more, many graduates rely on someone else Hello, Mom and Dad! to help keep their credit reports clean: 19 percent overall and 52 percent under the age of 25 get outside help. 1

4 STUDYING UP ON STUDENT LOAN ASSISTANCE Help paying off education debt is one of the hottest employee perks 4 Student loan repayment: An opportunity for employers With the burden of student loan payments hanging over so many heads, it may be no surprise that assistance in paying off educational debt has become an in-demand workplace benefit. According to a recent Pollfish survey, employees desire to rid themselves of student loan debt is intense.³ In exchange for a student loan repayment benefit: 53% would consider a salary cut. 46% would give up paid time off. 33% would relinquish a retirement benefit. 23% would give up health care benefits. Those workplace sacrifices are tame compared to those discovered by another recent survey, which revealed that student loan debt results in anxiety, sleep loss and the inability to make life decisions.⁴ For some, the distress is extreme. When asked what they would do to make their student loans disappear, those surveyed said they d: Go without social media for a year. 75% Move back in with a parent. 34% 5% Cut off a finger or toe. Live without electricity for a year. 20% 19% Break up with a significant other. The intense desire for debt relief explains why many companies are adding student loan assistance to their lists of nontraditional benefits. Examples include cosmetics powerhouse Estée Lauder, First Interstate Bank, computer technology company NVIDIA, business-supply company Staples, book publisher Penguin Random House, and Ceridian, a human resources software and services company.

5 STUDYING UP ON STUDENT LOAN ASSISTANCE Help paying off education debt is one of the hottest employee perks 5 YOU DO STAND TO SEE LONGER-TERM NEGATIVE EFFECTS ON PEOPLE WHO CAN T PAY OFF THEIR STUDENT LOANS, HE SAID. IT HURTS THEIR CREDIT RATING; IT IMPACTS THE ENTIRE HALF OF THEIR ECONOMIC LIFE. Jerome Powell Chairman of the U.S. Federal Reserve Value-added services: Student loan repayment and planning The need for help with student loan debt isn t lost on insurance companies such as Aflac Group (Continental American Insurance Company), which recently added a host of value-added services that augment voluntary insurance. Student loan assistance from Peanut Butter and upfront planning resources from College Advisory Services are among them. In fact, they are just two of the many options included in the company s Financial Fitness suite of available services. The services are outlined on the Value Add Benefit Builder, a web-based tool that allows employers to view and select the options they want and also see estimated per-employee, permonth costs. They then work with their brokers to ensure the services are the best fits for their workforces before finalizing their choices. The student loan option is available as an employer-paid benefit that allows companies to contribute directly to an employee s student loan, much like they contribute to a 401(k). Students and parents qualify for the benefit, as long as the loan is in their name. Participating employees have access to a website that provides them with resources, tools, a loanrefinancing marketplace and debt-counseling services. Less debt, more committed employees As companies meet with benefits experts to determine which voluntary insurance products are the best fit for their employees, value-added services such as student loan assistance should be part of the discussion. That s because help paying education loans can be a deciding factor when employees, especially young employees, make job-related decisions: According to a recent American Student Assistance survey, 86 percent of young workers say they would commit to an employer for five years if the company helped pay back their student loans.⁵ In today s world where companies struggle to attract and retain bright, talented workers that s a serious return on investment.

6 STUDYING UP ON STUDENT LOAN ASSISTANCE Help paying off education debt is one of the hottest employee perks 6 Sources 1 CNBC. Student debt could hold back economic growth, should be discharged in bankruptcy, Fed chief says. Accessed March 1, com/2018/03/01/student-loan-problems-could-hold-back-economic-growth-fed-chief-says.html. 2 MarketWatch. America s growing student-loan-debt crisis. Accessed March 1, Employee Benefit Adviser. Student debt relief trumps other benefits. Accessed March 1, SoFi. Data suggests student loan stress more extreme than you thought. Accessed March 1, American Student Assistance. New survey reveals burden of student debt on young employees. Accessed March 1, uploads/2017/06/feb_28_2017.pdf. This article is for informational purposes and is not intended as a solicitation. Continental American Insurance Company (CAIC), a proud member of the Aflac family of insurers, is a wholly-owned subsidiary of Aflac Incorporated and underwrites group coverage. CAIC is not licensed to solicit business in New York, Guam, Puerto Rico, or the Virgin Islands. CAIC s affiliation with the Value-Added Service providers is limited only to a marketing alliance, and CAIC and the Value-Added Service providers are not under any sort of mutual ownership, joint venture, or are otherwise related. CAIC makes no representations or warranties regarding the Value-Added Service providers, and does not own or administer any of the products or services provided by the Value-Added Service providers. Each Value-Added Service provider offers its products and services subject to its own terms, limitations and exclusions. Value-Added Services are not available in Idaho or Minnesota. State availability may vary. Continental American Insurance Company l Columbia, SC AGC EXP 4/19