Here’s an experiment for you. Walk outside and stand on a street corner. Ask the first ten adults that walk by you what is the biggest cause of financial stress in their lives. I can almost guarantee you that at least seven of those strangers will quickly respond with two words, “student loans.”
Student loan debt has become nothing short of a crisis in America, topping $1.6 trillion dollars in 2019. To put that in perspective, if ever adult in America, regardless of age or whether they attended college or not, agreed to dig into their own pockets to wipe out student loan debt, it would take about $8,000 per person to do so!
In an era when a bachelor’s degree is a baseline qualification for most non-trade jobs, we essentially make taking on tens of thousands of dollars worth of student loan debt a necessity for millions of teenagers whose parents are unable to bare the full cost of higher education. In fact, the average college graduate leaving school in 2017 left with $28,650 worth of student loan debt.
Even as entry-level employment becomes more competitive as each year more and more college graduates flood the job market, debt levels continue to rise, and because of federal law surrounding student loan repayment, even the most cash-strapped young people have few options with regards to alleviating the stress of loan payments, especially from unscrupulous private loan providers.
One of the professions hit hardest by student loan debt are educators. Many states not only require teachers to hold a bachelor’s degree, but also a master’s degree. Despite far lower than average salaries, teachers must attend six or more years of education beyond high school just to quality for a high-stress job that pays as little as $30,000 in some states.
It’s no surprise that roughly half of teachers leave the profession in less than five years, and that teacher turnover has disastrous impacts on schools and student outcomes. In fact, each lost teacher can cost a school between $15,000 and $20,000 to replace and retrain them. In addition, constant teacher turnover leaves some schools unable to fill vacant positions, sometimes even putting substitute teachers in front of students for a semester or an entire academic year. A revolving door of inexperienced teachers and teaching vacancies leads to lower student outcomes, which hurts enrollment numbers and funding for schools just trying to stay open.
Another industry hit hard are those who work for nonprofit organizations. NPOs usually only rely on private funding for revenue, and this fluctuating and scare resource availability usually leads to very low salaries relative to the private sector. For example, some nonprofits pay full-time college graduate $30,000 or less because money simply isn’t available for much higher salaries. When the average college grad is leaving school with $28,650 worth of student loan debt, it can be difficult just to pay normal bills on that low of a salary, never mind make substantial dents in student loan payments.
However bleak this may seem, there are some glimmers of hope for those who work either as teachers or for other NPOs. Various student loan forgiveness programs exist to help reduce or eliminate some federal student loans after a certain number of years in a public service position.
The Public Service Loan Forgiveness program, for example, forgives 100% of remaining federal loan balances after 120 consecutive on-time payments (10 years) in a qualifying public service position.
Sounds great, right? Not so fast.
These programs are purposefully incredibly difficult to take advantage of, disqualifying eligible candidates for the slightest of infractions, such as writing the wrong formal address of an employer on the application, or making one payment even a few days late. In fact, a lower percentage of eligible workers were able to take advantage of this program than were accepted to Harvard in 2019.
This is due to the complexity and confusing nature of the paperwork that is required to properly take advantage of these programs. One new solution to this problem for workers, and their employers, are financial wellness programs.
Financial wellness programs are a new type of workplace benefit that employers provide to their staff in addition to the normal benefits such as 401(k), healthcare, etc.
These programs vary in their service offerings, but most offer the ability to provide employees with either one-on-one support from a financial professional, or access to content to help employees understand how to improve their financial condition.
One of these financial wellness programs, Holberg Financial, even offers a specific program just to help workers fill out the right paperwork and take advantage of the various student loan forgiveness programs they are eligible for, potentially saving workers thousands of dollars each year.
Employers not only benefit from improving job satisfaction, company culture, and buying goodwill with staff, but also reduced turnover costs and a way to stand out from the competition when recruiting new employees. Since roughly 80% of Americans report being extremely stressed about their finances, employers have the ability to offer something that few competitors offer which appeals to almost all potential new hires, especially those below the age of forty.
Student loan debt continues to be a major issue in America, if you have any doubts just follow some of the candidates in the 2020 presidential election who are making student loans a cornerstone of their platforms, signaling how widespread and high-priority this issue is for most Americans.
While employers can’t necessarily prevent their employees from taking on student loan debt, by offering things like financial wellness benefits, they can provide their staff a way to manage and eliminate debt which ultimately helps them remain in their current position, especially for educators and those who work in the nonprofit sector.
Get more information about financial wellness programs here.