Which employees struggle the most with student loans?

by Jovan Hackley | Jun 27, 2016

There’s a dangerous disconnect in the minds of many HR Directors and CEOs who don’t realize they actually have the power to do something about today’s student loan problem.

As I was talking to a colleague, we’ll call him “Joe,” I heard, “Student Loan Genius might be great for us, because we employ a lot of Millennials.”

Now, I won’t say that Joe was wrong, but I had challenged him to think about the bigger picture. No matter which study you read, almost every dataset shows student loans aren’t just a problem for Millennials. College debt affects working professionals of all ages, and you’ll be surprised to learn which of your employees are affected the most and how.

So, which employees are having the toughest time with student loans?

1. THE RED GENERATION: GEN X HAS THE BIGGEST STUDENT LOAN BALANCE

When it comes to “tough times” with student loans, there are a few ways to divide the pie. At the end of the day, the bottom line is about… well, the bottom line. And when it comes to the numbers, employees from Generation X carry more of America’s $1.3 trillion of student loan debt than any other age group.

According to the Federal Reserve Bank of New York, borrowers between the ages of 30 and 49 hold 50 percent of today’s student debt.

2. GEN “Y NOT BORROW:” MILLENNIAL EMPLOYEES ARE THE MOST LIKELY TO HAVE STUDENT LOANS

While Millennials don’t carry the majority of today’s student loan debt, they do win the prize for being most likely to have at least one student loan. Gallup data from 2016 showed that while they haven’t borrowed as much as the X-ers (maybe some of their parents borrowed for them), 35 percent of Millennials are facing the student loan burden.

Following behind Gen X at 25 percent are the Baby Boomer Generation, with 6 percent of its population carrying student loans around on their credit report.

3. GEN DEBT-STRESSED: GEN X IS THE MOST MONEY WORRIED

Money is just one side of the student loan problem. Another major issue is the stress that debt has on employees. Data from Purchasing Power on debt-stressed employees shows companies are losing 2-3 hours of employee productivity every week to their financial issues. In addition, debt-stressed workers are five times more likely to battle anxiety and depression, which translates into more stress and higher employer healthcare costs.

So, which of the generations are the most worried about their financial situation?

Gen X tops the list of worriers, with 62% of them reporting that handling their financial situation is stressful, according to data from the American Psychological Association. In contrast, the majority of Millennials and Baby Boomers surveyed did not find their financial situation stressful.

4. PAYMENT MISSERS: THIS GENERATION HAS THE MOST DELINQUENT OR LATE STUDENT LOANS

Between 2004 and 2012, the number of student loan borrowers who are delinquent (late by more than 90 days) almost doubled, according to the Federal Reserve. While every age group has its share of payment-missers, Generation X’ers are the most likely to make this costly credit mistake.

Data from the same Federal Reserve study showed that historically, those in Generation X make up the largest portion of missed student loan payments.

5. MILLENNIAL WOMEN NEED THE MOST STUDENT LOAN HELP

A BusinessWeek report showed that Millennials aren’t earning as much as their parents. One of the reasons this is a huge problem is because statistically speaking, this generation – and more specifically this generation’s women – are more likely to carry income-devastating debt.

A report from The Institute for Women’s Policy showed that Millennial women earn, on average, $30,000 per year. Recent federal student loan data showed that the national average student loan debt was $28,950 or 96% of a Millennial woman’s income.

In addition, our data shows an average student loan payment of $638 per month for our users which is an estimated 30% of a Millennial woman’s income. These employees are making $5,000 less than their male counterparts and consequently need the most help with their student loans.

STUDENT LOANS AND THE FUTURE OF EMPLOYEE BENEFITS

The realities above, combined with the fact that 99 percent of those eligible for student loan forgiveness aren’t even enrolled, means there is still a lot of work to be done for employers who are serious about employee wellness. The numbers repeatedly show that more than half of most employee populations are affected by student loans and Congressional Budget Office projections show that by 2024, our $1.3 trillion problem will double.

According to employee benefits and financial wellness veteran Henry Yoshida, “Today, student loans are one of the biggest hurdles to investing, starting a family and other basic life milestones working professionals should be able to reach.”

According to Yoshida, “To me, the Student Loan Genius benefit just makes sense for companies because it makes sense for their employees.”

This impact data shows that student loan benefits are core to the future of employee wellness programs for employers that really care.

While only 3 percent of employers offered student loan benefits in 2014, the headlines and early data show that this trend has fast traction. If you or your company are interested in learning more about student loan benefits and positively impacting the lives of employees, please contact us.

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by Jovan Hackley | Jun 27, 2016

by Jovan Hackley | Jun 27, 2016

by Jovan Hackley | Jun 27, 2016