In the fourth quarter of 2018, student loans in “serious delinquency” reached an all-time high of $166.4 billon, according to a recent article from Bloomberg News. Loans with no minimum payment for 90 days are considered “seriously delinquent.” The majority of borrowers in this unfortunate financial predicament were 40-49-year-old parents paying for their children’s college expenses.
Another staggering figure: a record $1.4 trillion in overall national student loan debt—the highest ever—paints the obvious picture why a surge in delinquency is essentially inevitable.
Even as the unemployment rate dips below 4%, delinquencies continue to increase, a finding that Bloomberg suggests is a result of competitive compensation failing to cover the insurmountable cost of employee student loan debt. In this case, benefits should fill the gap.
The onus is shifting to employers to design and implement creative solutions to this growing debt problem. Many companies are alleviating employee student loan debt to avoid delinquencies by tackling the issue with payroll-based student loan repayment plans.
Higher Education benefits like student loan repayment, refinancing and 529 savings for future college funds are becoming the “new normal” as an influx of debt-burdened recent-grads enter the workforce. Moreover, the Gen-Xers mentioned above, bearing debt to better their children, are crucial contributors to businesses across the country.
Many employers see the value in engaging with solutions instead of perks, as recent data suggests 60% of employees would be willing to give up an existing benefit in exchange for a higher education benefit. Since salary alone isn’t solving the student loan delinquency issue, strategic benefits for financial wellness are a surefire way to supplement competitive compensation packages that acquire and retain the best talent in the industry.
At LEAF, we’ve been surveying the Landscape of Higher Education Benefits for years. And we’re experts in integrating seamless student loan paydown programs for organizations who are ready to help their employees avoid delinquency and save for future college costs.
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