How Student Loan Debt Impacts All Organizations
In 2021, student loan debt hit about $1.7 trillion across 45 million borrowers. Student loan debt has always been a burden for many. In fact, 3 in 4 respondents associate negative feelings with their loans. Of those:
- 41% feel frustrated
- 34% feel hopeless
- 26% feel angry
- 22% feel ashamed
Around 150 million workers are currently in the United States, meaning 30% of the workforce is struggling with some type of student debt.
Some states struggle with student loan debt more than others.
- New York
These four states had the highest total federal student loan debt among outstanding borrowers. These states represent nearly 30% of all U.S. student loan borrowers.
Collectively, borrowers in these states owe more than $440 billion of student loan debt…
And by age groups…
Student loan debt impacts all age groups.
- < Age 24: $115.5 billion (7.8 million borrowers)
- 25 – 34: $500.5 billion (14.8 million borrowers)
- 35 – 49: $601.7 billion (14.2 million borrowers)
- 50 – 61: $262.2 billion (6.2 million borrowers)
- > 62: $86.8 billion (2.3 million borrowers)
Not surprisingly, Gen X and Millennials have the most student loan debt compared to other generations. This means that a high number of our current workforce is struggling with student loan debt. Covid-19 certainly didn’t make this easier…
And current workplace status…
More than 69% of those with student loans have seen a reduction in household income as a result of Covid-19. Of these, 23% have had a significant change in their work situation, including:
- 8% who have become unemployed
- 7% who have switched jobs
- 6% who have been furloughed
- 4% who are working multiple jobs
- 4% who have gone from full- to part-time
These hardships just make the process of repaying loans far more difficult.
Can You Relate?
It’s safe to assume that every organization in the United States has some employees with student loan debt. According to TIAA, especially those in the public and non-profit sector have experienced an especially stressful time with student loans.
Due to the high number of employees with student loan debt, some employers have implemented programs to help employees with these costs:
Student Loan Forgiveness Program
In 2019, 8% of companies offered employee student loan repayment assistance, but it’s important to note that these problems are usually taxable. With the pause of student loan repayment in 2020, there may be some program changes on the horizon…
Whether through an EAP or another separate financial counseling program, this can be an instrumental guide to helping pay off student loans. Working with someone to budget, plan, and understand the financial nuances of debt is invaluable to repayment.
Employer-Sponsored Loan Program
With possible car debt, mortgages, rent, and other necessary household costs, student loan repayment can be one of the more expensive items on your list. Additionally, with student loan repayments on a pause, restarting these payments when we know many employees are trying to bounce back financially is challenging.
Having some kind of loan program embedded in your organization is a win-win for everyone. Learn more about TrueConnect’s program here.
Student loan debt in the news…
With 75% of those who have negative feelings towards their loans, as mentioned earlier, these programs may be able to shift the narrative just a little. While they won’t automatically replace the feelings of frustration, hopelessness, anger, and shame, they do bring more awareness to the oh-so-common debt in the United States.
While there is still much debt in the United States when it comes to education, employers have the ability to incorporate voluntary benefits that can positively influence student loan repayments.
How do you feel about the student debt cancellation that’s been in conversations?