I’ve always been interested in demographic trends and what that means for the industries we cover here at B&T. In this week’s paper, I wrote about how employers are looking at the older end of their workforce. We know that an older and more experienced workforce can be a valuable asset for a company, particularly as it’s raising up its next generation of talent, but an older and financially strapped workforce is another beast altogether. What steps are employers taking now to make sure those older workers are an asset and not a liability?
The people I interviewed described several solutions, including health and wellness programs in the workplace and slicing and dicing data to persuade CFOs of the long-term benefits of better retirement readiness.
Perhaps with an eye toward that problem, some companies have also been looking at student loan paydown as an employee perk. That’s basically Gradifi’s entire proposition, and after I met my weekly deadline, I noticed an item about the Boston company’s support for a bipartisan bill that would extend tax breaks to employers who offer student loan paydown assistance.
Gradifi works with employers to develop student loan paydown benefits. In one instance, Gradifi worked with Radius Bank to launch a debit card with a student loan paydown perk. You may recall that First Republic Bank bought Gradifi late last year – First Republic liked Gradifi’s platform so much they bought the whole shop – and the company earned the endorsement of the American Bankers Association.
All this suggests companies are taking student debt seriously as a potential risk factor where their employees are concerned. And why shouldn’t they? Employees might push off retirement planning or further education in favor of paying down student debt, and in really extreme cases, the stress might have even more adverse effects on a person’s well-being.
Student loan debt increased to nearly $1.3 trillion at the end of the third quarter last year. The average monthly payment for a borrower between the ages of 20 and 30 was $351, while the median payment was $208. Personally, I’m skeptical of getting into averages because I think it’s also worth considering that the most vulnerable borrowers aren’t always the ones carrying the greatest debt; more often, they’re carrying modest amounts of debt, but because they didn’t finish their degree program for one reason or another, they aren’t reaping the full benefits of a college degree.
As the banking industry starts to think about how it might better attract and retain younger generations among its ranks, I would humbly suggest that student loan paydown benefits might be worth a second look.