How Employers Could Help Solve The Student Debt Crisis


America needs an urgent conversation about college affordability and how the cost of higher education is hampering economic growth. It’s a trillion-dollar problem that requires solutions now.

More than 43 million people in the U.S. are struggling under the burden of student loan debt. Americans owe more than a trillion dollars in student loans, and the average 2016 graduate owes north of $37,000 – up 6 percent from the year before. Those are the kind of numbers that could alter the life trajectory of an entire generation.

A 2015 American Student Assistance survey entitled “Life Delayed” outlines the myriad ways college loan debt is hurting borrowers and the U.S. economy. The financial and social consequences are dramatic. Not only is this debt preventing young people and other borrowers from buying a car, purchasing a home or saving for retirement, it’s forcing them into specific career paths and delaying important life decisions such as marriage and starting a family. Many graduates have trouble affording even basic necessities and making their monthly payments, while others can’t fully participate in the economy and have to put off major investments such as starting their own businesses.

Fortunately we are starting to see solutions emerge from the private sector. One simple but powerful approach: companies offering employees assistance with student loan repayment as part of their benefit packages.

At Natixis Global Asset Management, for example, employees who have been with the company for five years are offered $5,000 in student loan repayment assistance, and then another $1,000 a year for the next five years. A whole host of other companies, from PricewaterhouseCoopers to Fidelity Investments, have created their own similar programs.

These businesses and others around the country understand that company-sponsored student loan assistance programs aren’t just the right thing to do, they provide an economic boost and are effective recruiting and retention tools. According to the same American Student Assistance survey, 76 percent of respondents said that if everything else was equal, an employer-sponsored student loan repayment assistance program “would be the deciding factor or have a considerable impact” on whether they took a job.  That’s a powerful competitive advantage.

Despite a growing recognition of the value of student loan assistance initiatives, we need to do more to make them a standard employer-provided benefit – particularly since just 3 percent of U.S. employers currently offer these types of programs.

So what can we do to help incentive the other 97 percent?

We can start by taking action at the national level and pass bipartisan legislation that is pending in Congress. These bills include the Student Loan Repayment Assistance Act and the Employer Participation in Student Loan Assistance – co-sponsored by Reps. Scott Peters (D-Calif.), Rodney Davis (R-Ill.) and Tom MacArthur (R-N.J.).

If passed, this legislation would enable employers to assist employees with their student loan repayments through a tax-exempt benefit. Currently student loan reimbursements are taxed, and these bills would offer new incentives for companies to help employees pay off student loans more quickly.

It’s a good business investment that makes financial sense. Not only do companies get to offer an attractive incentive to help recruit and retain talented employees, but it enables employees to speed up their repayment process so they have the opportunity to achieve the same personal and financial milestones that previous generations enjoyed.

Excessive college loan debt threatens our economy and the financial stability of this country. While no single solution will completely solve this crisis, by working together and harnessing the power of the business community, we can achieve meaningful progress.

John Hailer is president and CEO of Natixis Global Asset Management, the Americas and Asia.


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