The average graduate from the UK owes more than £50K in student debt. With annual tuition fees at over £9K, it’s clear why students can’t afford higher education only through work and help from their parents. Tuition is one of the many other expenses, which push students to a corner. It’s inevitable for them to get student loans to help.
But when the time for paying the debt comes, we can’t help but wonder: did the educational system provide enough value for the money? Can the graduate easily work their way towards a quick pay-off?
The Bank of England takes this issue seriously. In January 2019, its representatives announced the early stages of a project that is supposed to help graduates to pay off the depth without serious problems.
But businesses aren’t leaving things to the government only. They are willing to contribute to a solution. Many high-level companies that pay off student loans in such a way attract and retain talents in their offices.
Both Parties Benefit When an Employer Pays Student Loans
Millennials, which own the job markets at the moment, are not excited about gym memberships and yoga classes paid by their employers. Sure, those incentives are cool. But this generation is tied up in student debt and after graduation, that’s the biggest problem they face.
Companies from the United States already got the hint. Staples, Live Nation, Chegg, First Republic, and many other brands offer to pay part of the employee’s student debt when they get on board. Each of them pays a different amount yearly. Nvidia, the company that makes graphics cards, pays off up to $6K per year.
When recent graduates realise they won’t have to sacrifice a large chunk of their salary towards debt instalments, it’s the best incentive they could get when they are wondering where to start their career in tech.
The benefits of the worker are clear. But why does the company do this? What’s in it for the business?
Falling behind on student debt payments demotivates employees. According to the information provided by the Board of Governors of the Federal Reserve System, 10% of the graduates affected by student debt are behind on their payments.
When employers directly contribute to these payments, they offer a huge relief for their employees. Current students should keep this in mind. It gives them an opportunity not to concentrate on saving money and invest in their education more.
They can afford to use educational and writing services, such as EduBirdie. It allows having access to academic researches, data analysis, proofreading or editing services, etc.
At the same time, it provides them with more free time and the ability to concentrate on future career goals.
Companies perform well when they show results in seven main areas: leadership, job creation, community treatment, environmental impact, product quality, customer treatment, and worker treatment. Nvidia is the leader in worker treatment. Its programs make the workers happy by offering better healthcare benefits, alternative treatments, but student loan repayment as well. Companies that pay off student loans also win at community treatment, since the debt levels are a major issue for our society.
Special Student Loans Repay Programs Are a Hit among U.S. Employers
Fidelity Investments, an American financial services corporation, offers a special Student Debt Employer Contribution program. The participating companies found the program very useful for their recruiters. When trying to attract and retain top talent, the student debt repayment benefits were a major factor of attraction. This program puts the companies in competitive advantage on the market, so they can recruit the best employees straight from the university.
Student loan payments impose a huge burden on U.S. graduates. It’s a huge issue not only for the people in debt but for corporations as well. The Millennial generation is not driven by financial benefits, but they have to find ways to repay student loans. When their company offers such incentives, they will stay there and do their best to contribute to its growth. They do this out of respect.
Medical school graduates, in particular, face a huge problem with student loans debt payments. They spent more years at school and accumulated a larger amount to repay. That’s why Abbott, one of the leading healthcare companies in the USA, developed a special program to help its employees pay off the debt. The program, known as Freedom 2 Save, provides the employees with a 5% match deposit into their 401(k) plans for the 2% of their eligible pay that goes towards student loans. This saves the employees from making their own contributions to the retirement plan, so the student loans gets easier to repay.
Abbott targets a key problem with this program. The employees who are stuck with student loan debt find it difficult to save for retirement. Thus, they postpone their contributions to the 401(k) program, making it harder to meet the match. 66% of Millennials don’t have any savings for retirement. Student loan debt is one of the reasons that contribute to such procrastination.
UK Companies Should Follow the Lead
EdAid is a British technology platform that helps graduates to pay back their debt by giving them access to the best graduate jobs and internships. The employers who become part of this program get to recruit great talent, but they also use it as a way to give back to the community. That’s the kind of social responsibility that Millennials demand from their employers.
Businesses position themselves as ethical employers, so they strengthen their status on the job market. Both sides benefit from the program; we just need to raise awareness so more firms will start helping their employees to deal with debt.
Is This the Real Solution?
Education loan companies make a huge difference in the way that graduates deal with debt payments. However, not all companies are part of such programs, and they cannot cover the entire debt amount, which is massive.
The problem is in the educational system itself. Degree programs are getting more expensive every year. With the increase in the price tag, they fail to deliver more value to their students. The graduates have their degrees and not enough skills to make it in the real world. They don’t make enough money right from the start, so repaying the debt becomes a serious problem.
Companies that help them handle this issue are great. But we’re still far from a solution to the real issue of university getting unreasonably expensive.