Friday, July 22, 2016

The Student Debt Crisis: What Role Should Employers and Professional Associations Play?

Generations of Americans have been raised to think that money spent on education is always a good investment. If you study hard and get decent grades, the rest is supposed to work itself out. You'll get job, pay off your loans and live the American dream. Unfortunately, many students are lent more than they can pay back in the years after graduation. The rule of thumb I've read is that you shouldn't borrow more than what you expect to earn annually when you graduate. Years after earning their degrees, today's graduates can't buy a home or start a family because they can't dig out from under their student loan debt. The statistics are startling:  

  • Almost 71% of 2015 bachelor's degree recipients had student loan debt. 
  • The average loan amount for those graduates was $35,000. 
  • 45% of people with student loan debt say college was not worth the cost. 
  • One in four borrowers are behind on their loan payments. 
  • The government is getting one heck of a return on the money it lends--20 percent on the loans that were made in 2013. 
  • In 1975, state schools received 58% of their funding from the states. Today the funding has fallen to 37%. 
A quick poll of ASHA staff showed that 25% are paying off a student loan for themselves and another 15% are paying on a loan for a spouse or child. I was contemplating this when I sat down next to Mike Muller from Common Bond at the Health and Benefits Leadership Conference in Las Vegas a few months ago. Mike started telling me about student loan refinancing. He expanded my thinking from a benefit we might put together for our staff to something that might make a great membership benefit for associations. 

When I got back to the office, I learned that our membership team was out ahead of me and already exploring options. We looped Common Bond into our discussions and just met again last week. In our last meeting, Mike described two new services that they're offering that really differentiate Common Bond from their competitors. First, they just added a clean and simple student loan assessment tool. It clearly presents people with their options for student loan forgiveness programs, loan consolidation and loan refinancing. We certainly wouldn't want someone steered toward refinancing without being aware that they were eligible for a student loan forgiveness program. Right now you can find this educational tool on the Gradible site, but it will all be integrated soon. If you have a loan, check it out.

Employers are starting to take note of this crisis and a few progressively thinking workplaces are offering student loan benefits. A Towers Watson survey indicated 4% of employers offered student loan repayment programs in 2015. That number is expected to rise to 26% by 2018. Carol Harnett shares what the Consumer Technology Association is doing to help their staff in her latest column. Common Bonds other new offering provides a tool to employers to administer such a program.

I'm really impressed with what Common Bond is offering. I had the opportunity to meet with them in their offices in New York City and I was also impressed with the culture of the company. Most of their employees have student loans and understand their clients/members needs. With every loan they fund, they also fund the education of a child in need. I had a friend refinance through Common Bond and she had a good experience. 

This is how Common Bond describes their programs. 
Our approach is to address the student loan debt challenge with 3 distinct solutions, that are integrated into one seamless, easy-to-use online platform. 
Student Loan Assessment tool - We know that awareness and education are absolutely critical elements to a successful student loan benefits program.   Most individuals want help to understand their options based on their specific debt situation.  Our assessment tool was developed to do just that, to make recommendations about the best approach to manage their loan debt – either through consolidation or income-based repayment, loan forgiveness programs if applicable, and refinancing. 
Student Loan Refinancing Benefits - Most students graduate with student loan rates that are at 7% or higher, with typically more than $75K in debt.  CommonBond’s web-based loan refinancing platform offers a simplified refinancing process to borrowers that yields an average of $14,000 in savings over the life of their loans, with zero fees.  There is no cost for associations to implement this benefit offering.
Loan Contribution Management – Increasingly, U.S. employers are considering the ,implementation of company-paid contribution benefits to accelerate the payoff of their employees’ student debt.   Our platform simplifies the management of this benefit, creating a cost-effective recruiting & retention tool in a very competitive labor market.  This offering is primarily geared towards the corporate market but available to member organizations as well. 
Organizations can choose to offer all 3 benefits, or pick and choose what works best for their workforce.   Some solutions are offered cost-free, and are designed for easy implementation with little time and effort on the part of the member association.
If you're interested in this topic, be sure and take a look at the August issue of Consumer Reports, The Student Debt Crisis -- Lives on HoldYou may also be interested in:
The statistics I quoted came from these sources unless otherwise noted. 

I enjoyed a fictional take on the issue in The Assistants by Camille Perri. It's a little less predictable than the typical summer beach read, but still light. 

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