It’s estimated that 40 million Americans hold $1.3 trillion in student loan debt.
It’s a burden is carried across generations as 44% of Millennials, 26% of Generation Xers and 13% of Baby Boomers carry debt for education expenses, according to Aon Hewitt study.
This debt burden can interfere with other financial obligations and saving for the future. The urgency to address the issue is becoming paramount. Solutions are popping up on the political trail and increasingly, at the workplace, as companies now offer both education and debt repayment services as a benefit to their employees.
Fidelity Labs is at the forefront of developing financial service solutions for its business customers, and rolled out a Student Debt Tool to the market in March. The portal includes a consolidated view of student debt and helps users identify options to lower monthly payments or pay loans down faster.
“Our hope is that by helping clients and employees better manage student debt, we can also help prepare them to think beyond their loans and into the future,” said Ashwini Srikantiah, product manager at Fidelity .
Colonial Life is one of the early adopters of Fidelity’s educational tool.
“We are sensitive to the challenges that student debt can add to our employees,” said Carl Gagnon, assistant vice president of Retirement Programs for Colonial Life.
There is growing bipartisan support in Washington for solutions as well. The Student Loan Repayment Assistance Act would incentivize businesses through a tax-exempt benefit to encourage the assistance of repayment for their employees’ debt.
“Only 3% of U.S. employers currently offer some form of student loan repayment assistance,” wrote Reps. Scott Peters (D-CA), Rodney Davis (R-Ill.), Tom MacArthur (R-NJ) and Natixis CEO John Hailer in a contributed piece to Forbes.com. “This number needs to grow, and quickly.”
If an employer provided $100 a month toward student loan debt, it may shorten a 10-year loan by three years. This could save thousands of dollars and go toward buying a home for a new family or strengthen retirement savings.
“Companies are starting to appreciate the changing needs of their workforce, including the impact of debt generally,” said Gagnon. “This is simply one step to assist with financial well-being and provide additional tools and resources related to financial planning.”