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Employee Student Loan Debt: 10 Things You Need To Know, Part One

Employee Student Loan Debt: 10 Things You Need To Know, Part One

by | Jan 29, 2018 | Blog

Employee student loan debt: 10 things you need to know, part one. What employers need to know about how student loan debt affects their employees.

The U.S. has a student loan debt crisis. And employers are paying the price.

Over 44 million Americans are carrying a total of $1.48 trillion in student loans. Forty percent of adults under 30 and 16 percent of adults overall live with outstanding student loan debt, according to the federal reserve’s 2017 Survey of Household Economics and Decisionmaking.

Chances are, your employees are among those affected. Employees facing significant student loan debt are more likely to defer saving for retirement, buying a home, getting married and having children. They’re also more likely to seek out a second full-time or part-time job to cover their expenses. As a result, their concentration, productivity and overall physical health suffers from the accumulated financial stress.

The financial cost of higher education is only increasing with time, matriculating well-educated, inexperienced and deeply indebted graduates into the workforce. In this two-part series, we offer you 10 things you should know about how student loan debt affects your employees:

1. Student loan debt is the second-biggest type of personal debt in the United States.

Student loans are one of the largest contributors to overall household debt among Americans, second only to mortgage debt. While the overwhelming majority of those loans are federally held, there has been an increase in borrowing from private lenders. Private student loans are ineligible for loan forgiveness programs or income-based repayment programs, complicating repayment plans and decisions on where (and how) to seek debt relief.

2. The amount of student loan debt Americans owe is getting worse with time.

In February of 2017, the Federal Reserve Bank of New York announced that student loan debt had grown for the 18th consecutive year and that the amount borrowed doubled in the last eight years, reaching a total more than $1.48 trillion owed. Not only are more students are taking loans for higher amounts but they are paying them back at a slower pace than in the past.

3. Student loan debt is affecting your workforce.

Sixty-eight percent of all new college graduates have student debt. Even if your employees don’t have significant amounts of student debt themselves (which is a relative assessment), they’re likely to have friends or relatives who do. Student loan repayment plans average at $351 per month and that number isn’t going down any time soon. It’s important to note that the average annual US salary for 24 to 35 year olds is $39,000. Student loan repayments are killing your employees’ financial wellness and are averaging nearly 10 percent of their income, replacing retirement contributions, mortgage payments and possibly even monthly health insurance costs.

4. The average debt per student has risen to nearly $30,000.

One fifth of graduated student loan recipients aged 25-39 take on extra employment in order to make payments on their student loan debt. Employees working a second job can mean lower productivity while at work and a difficulty in maintaining a reliable work schedule. Overworked employees are also more likely to experience fatigue and burnout from the added stress of juggling multiple jobs – as well as the stress from their student loan debt.

5. The average interest rate per student loan is approximately 5 percent, meaning your employees actually end up paying back significantly more than what they borrowed.

The interest rate paid by a loan recipient is dependent upon which type of loan and repayment plan that they have been given. For federal loans, the current amount for direct subsidized and unsubsidized (the type provided to undergraduates) loans is 4.45 percent. At the graduate level, the interest rate is 6 percent. For people 60 and over who take out loans to help younger relatives, the rate is 7 percent. Private student loans carry interest rates averaging 9 to 12 percent. Depending on the repayment or consolidation plans, these high interest rates can quickly inflate the initial amount of the loan and add tens of thousands of dollars to what an individual is trying to repay. And, interest and late fees are paid before any monthly payments are applied to the original loan amount.

And there’s even more you need to know. To learn more about student loan debt and your employees, be sure to read Part Two of this article here.

More on Student Loans and Financial Stress

Employee Student Loan Debt: 10 Things You Need To Know, Part One

Employee Student Loan Debt: 10 Things You Need To Know, Part Two

Student Debt Financial Stress Haunts Millennials and Older Workers, Too

What Tops Financial Stress for Employees?

The Student Debt Crisis is Growing and Affecting Your Workforce. What Can You Do?

Financial Wellness Matters: Here’s How to Convince Your Boss

Financial Wellness Matters: Here’s How to Convince Your Boss

by | Jan 22, 2018 | Blog

Financial wellness programs often go overlooked by HR departments because employers don’t understand the tangible benefits of reducing employee financial stress. If you know that your coworkers are carrying high levels of financial stress, don’t wait any longer to speak with management about a solution.

Show your employer that employee financial wellness is equally important to the health of the business as it is to the health of the employees themselves, by using these five talking points:

1. Every employee needs financial wellness and that starts in the workplace.
The majority of all employees worry about their finances on a regular basis (and spend an average of 12 work hours per month on financial issues, according to the latest research from Mercer). Nearly 40 percent of employees say they’d like for their employer to provide additional help with financial education, according to Bank of America Merrill Lynch’s 2017 Workplace Benefits Report Millennial Supplement. Productive ways to think about finances include planning for retirement, budgeting to pay off debt and learning how to live within your means. However, when financial stress hits, unproductive thoughts about finances rise to the surface and many people begin to feel overburdened and helpless. If employees are constantly preoccupied with their financial stress, they become distracted, unproductive and devote their work hours trying to resolve personal financial issues.

2. More of your employees are stressed about their finances than you think.
Forty-eight percent of employees admit to being distracted by their finances at work, according to a 2017 study from PricewaterhouseCoopers (PwC). Of those stressed employees, 46 percent spend three hours or more at work each week dealing with financial issues. Aside from hurting overall productivity (and, in turn, company profit), it also means that employees are less likely to be creative, thought-leading and reaching their highest potential during work hours. Financial wellness can help restore employee engagement and longevity with your company.

3. Financial stress is costing your company thousands of dollars every year.
Emotional stress causes physical symptoms as well. Your employees may be experiencing rapid heart rate, headache, gastrointestinal problems, restlessness or lethargy – among others symptoms – and all due to their lack of financial wellness. Over time, these symptoms evolve into chronic health problems. Nearly one million employees miss work each year due to stress related illnesses, with an estimated annual cost of $602 per person.

4. Financial stress is manageable – as long as you provide the right tools.
Financial stress is caused by many sources. From an inconsistent paycheck to the inability to pay down debt; anxiety over insurmountable student loans and even an inability to meet basic monthly expenses – financial stress looms from the inability to address life’s financial needs and this often can be easily resolved with the most basic of resources: education. Stressed employees want to get a handle on their finances – but they might not know where to find help for their personal, financial stressor. Providing employees with educational tools that help them track changing interest rates, plan for long-term (and short-term) payment goals and visualize their current spending habits are highly effective ways to reduce financial stress.

5. Employees with financial wellness benefits are happier, more productive and less likely to leave their jobs.
Experiencing financial stress doesn’t always equate to being underpaid. But, without the necessary financial wellness tools, it may lead your employees to seek out higher paying positions, or even take on a second job in order to relieve their financial stress. Seventy-six percent of employees who are financially stressed say that they would be more attracted to a potential employer who cares about their financial well-being, according to the previously mentioned PricewaterhouseCooper study.

When employees have the knowledge, tools and resources they need to make their best financial moves, it provides them with financial wellness while, at the same time, reduces their financial stress. This frees up time and energy in order for your employees to fully dedicate themselves to their work, while they’re in the office.

Is​ ​Financial​ ​Stress​ ​Making​ ​Your​ ​Employees​ ​Sick?

Is​ ​Financial​ ​Stress​ ​Making​ ​Your​ ​Employees​ ​Sick?

by | Jan 15, 2018 | Blog

You know financial stress can put a strain on your wallet, but you probably don’t think about the strain it can have on your body. The International Foundation of Employee Benefit Plans recently released their 2017 Workplace Wellness Trends Survey. Over 500 employers were asked to select the top medical conditions that keep company healthcare costs high. Seven of the top ten health problems listed are exacerbated by financial stress.

Not surprisingly, according to the American Psychological Association’s annual Stress in America study, one of the largest contributors to emotional stress is financial instability and worry. Of all studied stress-indicators, this area has consistently topped the charts for over a decade.

Here are five of the most common health problems associated with financial stress.

1. High​ ​cholesterol. Thirty-three percent of Americans admit to overeating when stressed out. Even if your employees aren’t reaching for donuts to cope with their financial stress, high levels of cortisol – the hormone released during emotional stress – can increase the amount of fat in a person’s blood (the triglyceride count). On its own, high cholesterol generally doesn’t have noticeable symptoms but it can greatly increase a person’s risk for a stroke, aneurysm or heart attack. The amount spent on cholesterol medications in the U.S. tops over $18.7 billion, annually.

2. Depression​ ​and​ ​Anxiety. The range of emotions associated with and caused by debt (of any amount) can lead to depression and anxiety – two of the most common mental health conditions in the U.S. In fact, depression and anxiety are characterized as the body’s natural physical response to stress. While symptoms will vary from person to person, over time, both depression and anxiety will lead to health problems, which increases the chance for heart disease, chronic respiratory disorders and gastrointestinal conditions.

3. Hypertension/High​ ​Blood​ Pressure. When emotional stress is present, it is immediately followed by a temporary spike in blood pressure, leading to hypertension. The coping mechanisms associated with stress – overeating, drinking alcohol, smoking and poor sleep habits – make individuals with high levels of stress more prone to the disease. About a third of the U.S. population currently suffers from hypertension, with a price tag of roughly $46 billion a year.

4. Heart​ ​Disease. According to the American Heart Association, heart disease accounts for seventeen percent of America’s national health expenditures. By increasing the amount of adrenaline and cortisol in your body, stress increases your heart rate, elevates levels of triglycerides and weakens the walls of your arteries. The current annual price tag for heart disease is at $273 billion.

5. Diabetes. Although now manageable with strict lifestyle changes, a regime of insulin and other medication, nearly one in eight Americans lives with diabetes. The mind’s subconscious response to stress is to physically prepare it for flight or fight. This includes making glucose and fat available to the body’s cells to use as energy. For diabetics, this stress-related elevation of glucose can cause greater insulin-resistance, ultimately making their illness worse and managing their diabetes more difficult.

Knowing how financial stress affects your employees’ health is a great start. Is there anything you can do as an employer to reduce that financial stress and get your team feeling relaxed and healthier? The answer is yes. By taking even the smallest of steps towards alleviating this financial stress, your employees will not only know that you care for their wellbeing, you’ll actually be making a positive difference for their health. You can encourage new behaviors while also using what is already in your arsenal of employee benefits:

  • Recommended computer breaks to allow your employees to move around for just a few minutes – at least once an hour. This offers mental as well as physical stress relief.
  • Offer healthy food options in the break room and around the office so employees aren’t tempted to reach for junk food. This will keep their energy levels up and their overall health in check.
  • Remind employees to use their untapped voluntary benefits that can help with stress, like counseling or discounted gym memberships.
  • Encourage your employees to use their unused paid time off. Unused vacation days are at a forty year high, with nearly fifty percent of PTO going unused last year. Paid time off is the perfect way for your team to destress, spend time with family, catch up on personal responsibilities and refresh energy levels.
  • Offer financial wellness benefits – whether you promote financial awareness, create a new benefit offering or offer financial education courses, this is going to be the number one financial stress relief for your employees, in the long term.

Considering that financial stress accounts for sixty-one percent of overall stress, helping employees gain access to financial management tools can mean tackling the root cause of the problem – not just managing the symptoms. There’s no universal cure for stress, but investing in your employees’ wellness is an investment for your company, which decreases healthcare costs while increasing productivity. A win for everyone.

10​ ​Simple​ ​Ways​ ​to​ ​Improve​ ​Employee​ ​Retention​ ​in​ ​2018

10​ ​Simple​ ​Ways​ ​to​ ​Improve​ ​Employee​ ​Retention​ ​in​ ​2018

by | Jan 8, 2018 | Blog

New Year’s resolutions often prioritize the old adage “out with the old and in with the new,” so it may feel odd to focus on employee retention this year. But, knowing how to keep the right people leads to better workplace morale, higher economic growth and can even enhance future recruitment efforts.

Here are some ways to make employee retention your number one resolution in 2018.

1. Reevaluate company culture.
Be honest about what you want your company’s culture to be. If your workplace has one too many dysfunctional teams, redundant projects or a general sense of low morale, it may be time to restructure. With input from your employees, you’ll have access to better understand the natural ebbs and flows of day-to-day activities. But, it’s your job to keep an eye on your company’s vision and be aware of how you, your employees and your company are in line with it.

2. Create a stable environment in times of change.
You can’t anticipate every change that will happen in your company but you can choose to be the face of collected calm and leadership during transition. Let your employees know their jobs are secure during times of flux by sharing your progress on the road to stabilization. Encourage open communication from your employees and provide transparency back to them. Acknowledge specific challenges they may face and provide relevant resources to help them overcome potential setbacks. A sense of stability will come from the top and it’s the job of company leadership to provide this.

3. Revitalize your hiring strategy.
In order to cut down on turnover, the first step is to ensure that the individuals you’re hiring actually want to be there. Front-load information about your company’s culture during the interview process. If you need team members to be available and on call late into the night, your new hires should know to expect a 10:00 pm phone call. Have your team keep a list of their own daily tasks (also a great way for you to better manage them) and have outgoing employees write descriptions for their empty positions – allowing for more detailed expectations for new staff members. Offering employee referral benefits is another great way to revitalize your hiring strategy.

4. Improve your training processes.
New employees should receive training conducted by experts in each department. You can either use in-house talent or hire an outside professional to lead on-the-job learning. This should introduce employees to new information, allow them to demonstrate their skills and knowledge and give them a tangible method to monitor their own improvement. Many successful training programs offer cloud-based components providing employees access to additional materials, allowing them to invest in self-directed learning.

5. Create room to grow.
Employees won’t stay with your company if they can’t imagine their future there. New hires should understand their potential for advancement. Meet annually to discuss their growth, encourage training programs and remain flexible to new challenges they might want to take on. Promote from within the company (rather than externally hiring for leadership positions) – it’s a great way display that your employees have a path forward and you want to help lead them there.

6. Welcome employee feedback.
Regular surveys are a great way to gauge what employees need in order to be successful – and to learn where you can step up, as an employer. Exit interviews are equally important. Don’t ask for feedback just for show. Let your employees know their problems are heard and that you want to resolve them by making changes based on their recommendations.

7. Build trust between employees and managers.
Management is often an employee’s first point of contact when they are experiencing a problem. Encourage an open door policy to ensure that employees come to management when issues first arise, not when they’ve reached a point-of-no-return. Management should be transparent with their expectations of all employees and offer positive reinforcement and support.

8. Be more flexible.
Work-life balance is crucial for managing stress, promoting creativity and generating enthusiasm for work. Giving employees the option to telecommute, offering a flexible schedule and allowing for “personal days” can show employees you are invested in their well-being, not just their bottom line.

9. Buff up your benefits package.
Offer benefits that your employees want – as well as what they need. Currently, the most requested benefits are: better healthcare coverage, flexible hours, work-from-home options, mental and physical health perks (like “personal” days, yoga classes and gym memberships), tuition assistance programs and making financial wellness education a priority. Employees are looking for benefits that make their lives outside (and inside) the office more enjoyable. When employees are more secure in their personal lives, they are more likely to feel satisfied in their work.

10. Invest in employee wellbeing.
Employees will stay at a company longer when they feel that they’re being challenged and respected. Benefits packages providing employees with avenues for self-improvement such as: financial management tools, on-the-job training programs and tuition reimbursement – can be even more attractive than salary increases. No one likes to feel stagnant in their career. Providing opportunities for growth inside and outside of work is essential for your employees, and their retention.

A New Policy is Here to Provide Relief for Employees with Medical Debt

A New Policy is Here to Provide Relief for Employees with Medical Debt

by | Jan 2, 2018 | Blog

According to the CFPB, 43 million Americans live with unpaid medical debt on their credit reports, and as of June 2017, more than $127 billion in medical debt was reported to be in collections. Due to the incredibly complicated ways medical expenses are being billed, collected and reported, debtors inevitably incur damage to their credit report.

Fortunately, as of September 15, 2017, the three major credit bureaus – Experian, Equifax and TransUnion – have launched a new policy in order to provide temporary, yet significant relief to those with medical debt. There is now a 180-day grace period (6 months) before unpaid medical bills show up on an individual’s credit report. Make sure that you understand these three important facts about medical debt and how to access this grace period. It can provide your employees not only peace of mind, but will help protect your employees’ credit scores – and maybe your own as well.

1. Medical Debt is Very Common
Not only does medical debt make up two-thirds of all debt in collections, but it’s also virtually impossible to avoid in the instance of an unexpected illness or injury, no matter the size. Over 60 percent of households with medical debt report that the debtor was covered by health insurance at the time of injury – meaning that their overwhelming medical debt is likely a post-insurance-coverage balance. Those who are Insured, often find themselves in the dilemma of being expected to pay the balance of their medical bills upfront while waiting for reimbursements from their insurer, which can take months to years. In the meantime, these large, unpaid expenses (bills often reach into the five and six-figure mark) seriously harm credit scores. Those who are uninsured, have a chronic illness or have a disability – or have a family member who does – have even more of a problem paying back medical debt due to the high, accumulating costs and interest rates.

2. The New Policy Can Help Your Employees
In addition to the 180-day grace period (not adding medical debt to credit reports until the 6 month mark), this new policy will remove any existing or added medical debt from a person’s credit report once the debt has been paid by the insurer. FICO and VantageScore, two credit-scoring companies that create models for calculating credit, have updated their formulas to reflect the reality that medical debt is not an accurate representation of a person’s credit risk. Moreover, individuals whose only debt is medical debt will receive a smaller penalization than those with combined debts – it has been shown that these individuals are much less likely to default on payments. Although this six month period of time will allow consumers to access their insurance reimbursements and pay back bills, keep in mind that many banks and other lenders have not adopted this new scoring model. Which, means that individuals may find that they have different credit scores based on where they look – and there is no way to control which credit score will be used by whom.

3. Awareness is The First Step of Relief
To ensure that your employees reap the benefits of this new policy, make sure that they are aware of the changes. Previous medical debt will not be affected and will only be removed from credit reports seven years after it has become delinquent. Remind employees to check their credit report and monitor it regularly for inconsistencies – whether they have medical debt or not. Knowing the state of your credit report is the first defense against unwarranted debts, fraudulent accounts and other threats to your credit score.