Millions of people feel imprisoned by college loan debts. Many borrowers say their student loan debt controls life decisions. Consider how student loan debt puts life on hold.
People with student loans continuously feel stressed and anxious. Often, the monthly payment amount is more than they expected.
Nearly 85% of people with student loans say the debt is the biggest stress in their lives. Medical experts say that stress can cause people to feel frustrated, anxious, unfocused, and irritable.
No extra money
Many student loan borrowers have less than $1,000 in savings. If they have an unexpected major expense, such as a car repair or medical procedure, they use credit cards to pay the bill. Borrowers put off buying a home, starting a family, or taking a fun vacation.
Limited career choices
Many borrowers feel stuck in jobs they don’t particularly like. About 53% of borrowers say their loan debt impacted their career choice.
Many people with student loans want to be entrepreneurs. But they don’t want to take the risk of the business not working out. They need regular monthly income for their debt payment.
No retirement plans
Today many senior employees don’t have the funds to retire. Research shows workers over age 60 owe nearly 72% of student loan debt. That’s about $229 billion or $33,000 each. It’s the largest age group of people with student loan debts.
To pay off their student loan debts, older employees are withdrawing money from their retirement savings and borrowing against their 401(k) plans. Many say they can’t afford to retire. They plan to work beyond age 65.
Most younger employers also are not saving for retirement. Research shows that only 66% of younger workers are setting aside money for retirement. Of this group, about half have put away $10,000 for retirement. Nearly 33% have saved nothing.
Employers can provide relief
One way employers can assist employees with student loans is to provide a non-taxable benefit, designated by the new CARES Act, of up to $5,250 before Dec. 31, 2020. This blog offers ideas to help employees juggle financial challenges and student loans in a COVID-19 economy.
Another way businesses can help relieve employees’ financial stress is by offering Employee Choice. It is a student loan repayment benefit exclusively offered by BenefitEd. It’s designed to use funds employers already have set aside for 401(k) matching contributions.
The Employee Choice plan allows employers to stretch their benefits budgets because they don’t have to adjust the budget they’ve already set aside for matching contributions. Employees can apply unused matching dollars to help repay their student loans. Or, they can split the matching funds to make a payment to their student loan debt and save the other part for retirement.