With continued declining support from the states, it’s unlikely anyone would be surprised by the rising costs of higher education. Colleges can and do point to declining state support, rising operational costs, etc., and while that may make sense with students and families, it doesn’t solve their ultimate concern of overwhelming student debt and how it will impact them after graduation.
In a 2017 survey from the National Association of Student Financial Aid Administrators (NASFAA), 98% of families indicated that they are looking for ways to lower the cost of college. This shouldn’t be surprising, but the more impactful result of this survey was that 69% of students ruled out a particular college due to costs. This number rose gradually from 58% when the survey was first distributed in 2008. At the same time, federal aid applications (via the FAFSA) have risen this year to 86% on average. The bottom line is that college is costing more and students and their families are struggling to find methods to pay.
According to studentloanhero.com, on average the class of 2016 graduates had $37,172 in student loan debt. This was an increase of 6% from 2015. Furthermore, the average monthly student loan payment that borrowers ages 20 to 30 years old must make are $351. (Again, that’s just the average, so while some are lower, some are also significantly higher too.)
Colleges have to balance their budgets and can only make so many cuts. Federal aid continues to be a controversial subject, and no drastic increases in aid or loan forgiveness are on the horizon. Additionally, the Public Service Loan Forgiveness program is limited in who qualifies and the entire program is in question currently. The statistics shared above make the case for new approaches and creative solutions, but not where you might expect them. In a 2017 survey conducted by IonTuition, data shows that student borrowers are increasingly supporting the concept of employers offering student loan repayment assistance programs and benefits. The survey found that 81% of more than 1,000 borrowers surveyed said they would like to work for an employer that offers student loan repayment plans. While 87% of respondents noted that they are currently employed, the majority indicated that paying off their student loan balances remains a persistent problem.
Perhaps this is an opportunity for employers to try some new and innovative approaches to recruit graduates. Of the respondents, 51% indicated that they would prefer a student loan repayment benefit over health care benefits. Similarly, 49% said they would prefer the same over a 401(k) package. According to NASFAA, these findings demonstrate that the concerns of young employees are vastly different from past generations, with a focus on paying down debt as opposed to planning for retirement or saving for other milestones.
IonTuition’s findings support the concept that companies can stay current by adding benefits that are more desirable to their workforce. Offering student loan benefits to employees could be a creative way to recruit and retain talented college graduates. Might this just be trading one financial problem for another? Potentially, but that doesn’t change the data and the fact that young college graduates are looking for something new and different from their employers’ benefits packages