Numerous surveys have shown that Millennials are less confident than older generations when it comes to retirement preparedness and general financial security. One of the main factors likely behind this lower overall level of optimism is student loan debt. For example, a Charles Schwab study conducted last year found that more than one in every three (37 percent) surveyed Millennials with student loans believe that their related debt payments are preventing them from consistently saving as much money as they would like to for retirement. Similarly, a more recent report from the Plan Sponsor Council of America (PSCA) found that 34.9 percent of surveyed employers said that at least a “moderate degree” of their workers believe that student loan debt is a current hurdle in the way of adequate retirement saving.
Nearly two-thirds of all employer respondents said that a majority of their workers have some form of higher education but a college degree was especially common at smaller businesses. Since it is likely that many of those employees have at least some student loan debt outstanding, it is not too surprising that repayment programs are starting to show up more often as an employer-provided benefit. Indeed, tuition reimbursement programs have been around for quite some time and 70.1 percent of employers surveyed by the PSCA reported that they offer such an incentive to active employees. Student loan repayment programs are slightly different and only 1.4 percent of respondents said that they currently provide this benefit. However, 11.5 percent of surveyed employers said that they are considering adding student loan repayment plans as a benefit available to employees, and nearly 30 percent remain undecided. Such responses are likely related to the sizeable proportion of both current and prospective workers that have asked surveyed employers about student loan debt relief as a potential benefit (see below).
Sources: Charles Schwab, FRBNY, WSJ, Pew Research, PSCAPost author: Charles Couch