Interested in attracting younger workers to your organization? Then consider beefing up your total rewards strategy with a student loan refinancing program.
Student debt has become one of the most onerous financial challenges younger workers face:
- The average debt carried by last year’s class of four-year college graduates was $28,400.*
- That’s roughly 50% higher than just 10 years ago.*
- Outstanding student loans have now risen past the $1 trillion mark.**
- Student loan payment delinquency has nearly doubled.**
No wonder more and more younger workers are turning to their employers for financial guidance and for help in repaying their student loans. One way you can provide this much-needed assistance is through a student loan refinancing program. These programs enable workers to pay off their student loans faster, often saving them thousands of dollars during the lives of their loans—money that potentially can be used to fund other benefits you offer such as 401(k) plans and retirement savings programs.
In addition, you can help younger workers by providing sound financial guidance. For example, here are six simple (yet often-overlooked) strategies that you can share with workers to help them repay their student loans more quickly and effectively:
- Organization is key. Employees with multiple loans and multiple lenders often have trouble keeping track of everything. Spreadsheets and online tools (such as those provided by tuition.io) can help these borrowers get better organized and gather all of their key loan information in one convenient place.
- Look into automatic payments. Setting up auto payments with lenders minimizes the chances of missing a payment (which hurts a borrower’s credit score). Some lenders even offer an interest rate discount for setting up auto payments.
- Consider bi-weekly payments. Borrowers can save a significant amount of money on interest and repay their loans faster by paying every other week as opposed to monthly. In addition, paying more than the minimum amount is a wise strategy for those who can afford it. Even an extra $20 speeds up the repayment timetable and saves on interest.
- Think about refinancing and other options. Refinancing loans at a lower rate is often worth exploring soon after borrowers leave school, increase their income or improve their credit. Prepaying and changing repayment plans are other options borrowers might consider to reduce the money they’re spending on interest.
- Look into federal loans. Although there are only a handful of lenders who refinance federal loans, it can be an attractive, cost-saving option for borrowers with high-interest-rate Direct unsubsidized and PLUS loans. Of course, borrowers should do their homework before refinancing federal loans with a private lender.
- Request forgiveness. Federal loans might be eligible for forgiveness, although these benefits don’t transfer to private lenders through the refinance process. The most common federal loan forgiveness programs are for borrowers in the military, those who work in public service or education, and those who utilize one of the government’s income-driven repayment plans such as Pay As You Earn (PAYE).
Helping employees eliminate student debt is one of the most powerful ways you can attract and retain younger, college-educated workers. It also helps you improve employee satisfaction and engagement levels while giving you a total rewards strategy that sets you apart as a true employer of choice.
No matter how you slice it, that’s a win-win for you and your employees.