On May 1, CommonBond hosted a panel event entitled, "What's Next for Financial Wellness in the Workplace?" The discussion was timed to coincide with the release of our new white paper, "The Missing Benefit in Financial Wellness."
The panel was hosted by Alex Cavoulacos, co-founder and president of The Muse, and also included Naz Vahid (managing director, law firm group head, Citi Private Bank), Heather Coughlin (U.S. solutions leader, financial wellness, Mercer), Tara Malone (vice president, employee benefits, Young & Rubicam Group), and Leigh Gross (vice president partnerships, CommonBond).
After an hour of insights from all of the participants, two takeaways were clear: student loan benefits are needed, and today's employers are in a unique position to help American workers alleviate their student loan debt.
Debt's a Bigger Problem Than Previously Thought
With higher education costs continuing to rise, student loan debt is affecting employees of all ages. While many view their outstanding loan balances as "good debt" that will increase earning power in the years to come, all are still looking for a solution to manage it in the meantime.
Heather first noticed the demand for student loan benefits on the employer side three years ago. After years of focusing on retirement benefits at Mercer, concern around student debt organically became a topic of conversation among employers and human resources executives in hopes of helping their workers' overall financial well-being.
Tara noted that addressing financial wellness was in everyone's best interest, saying, "Employees cannot produce their best work for our clients if they are not well-mentally well, physically well, and financially secure. Those three topics are interrelated." If employees aren't thriving, she added, company culture cannot thrive.
"Thriving" is not top of mind for many workers, who have no choice but to let debt govern their lives—whether that means passing on their passions in favor of higher-paying jobs or postponing retirement. Naz mentioned that with many couples where both partners have law degrees, combined debt often exceeds $1 million. Leigh agreed, sharing his own personal story: he and his wife had so much debt after law school that he left a job he liked when his wife was offered a relocation bonus that would help pay off their student debt.
What to Know Before Implementing a Financial Wellness Initiative
The key to an effective student loan benefit program is to gauge employee need and respond appropriately. As Naz put it, it's crucial for human resources executives to listen to what their employees need most. Leigh said, "It's important for employers to get an understanding of how student debt is affecting the company, then prescribe action-oriented solutions." These solutions include repayment on debt or tools that help employees manage it—Heather describes the latter as particularly important, as employees who don't have the credit scores to refinance their student debt need to know how they can fix their situations.
An organizational assessment can tell who at a company needs particular benefits, which will then help with scaling and rollout. Then, as Leigh described, employers can potentially address cost (as well as retention) issues by creating a program where student loan repayment either goes into effect after a certain amount of time or rises over time.
Where to Go from Here
Though there's a lot of positive feedback surrounding student loan benefits, the concept is so new that long-term data isn't yet available. Naz mentioned that companies that began offering such programs two or three years ago are now starting to see improved retention, while Leigh noted that in his experience at CommonBond, implementing student loan benefits led to a 20 percent increase in job applicants.
Still, Leigh went on to say that there are some results that are already widely evident. People will engage if they're offered something that they need rather than a lump sum of money as a bonus, and research has shown employees are willing to stay with an employer who addresses this particular problem. Even more than extra pay, student loan benefits inspire loyalty, which means they have more value for companies.
Even year to year, employers' emphasis on student loan benefits are rising. Leigh noticed that 12 months ago, human resources leaders said that they felt that addressing debt wasn't in their benefits scope, but that has changed and they now want to know how to implement these programs. This is more than a trend—as more and more startups offer student loan benefits, Tara noted, larger companies will have to do the same in order to remain competitive. Even people who don't need to take advantage of such programs will take pride in the fact that their companies offer them, Naz said. Finally, Heather predicted that before long, any company looking to be featured on a "Best Places to Work" list will need to offer student loan benefits.
Putting a Plan into Action
"What's Next for Financial Wellness in the Workplace" offered proof positive that student loan benefits are gaining traction, but supply is still far off from demand. With "The Missing Benefit in Financial Wellness," it's easier than ever for human resources executives to launch a conversation with their teams to implement a plan that will help employees of all ages in the years to come.