The Plan Sponsor Council of America (PSCA) revealed new findings from its study assessing student loan debt and plan sponsors’ responses to the perceived notion that student debt affects employees’ participation in company retirement plans.
Titled “The Impact of Student Loan Debt on Defined Contribution Retirement Plan Participation: Plan Sponsor Perspective,” the study surveyed PSCA organizational members in April 2016. The respondents’ organizations ranged in size from fewer than 50 plan participants to more than 5,000.
Probably not a big surprise to advisers or HR professionals, PSCA finds many Millennial employees say student debt keeps them from saving for retirement. More than a quarter (26.9%) of employers “reported a moderate degree of employees citing student loan debt as a barrier to saving,” while 8.9% cited a high degree. Another quarter (25.3%) cited a low degree of interference with retirement planning caused by student loan debt.
Overall, a sizable majority (62.3%) of employers reported that more than half of their employees had a four-year college degree or higher, and 30.1% said between 10% and 50% of their employees were at that education level. According to the Pew Research Center, 69% of students graduating in 2011-12 borrowed money to finance their college education, compared to 49% of students graduating in 1992-93.
PSCA finds these numbers are driving a shift in employer thinking, albeit a slow shift, with many employers taking a wait-and-see approach and allowing their peers or advisers to show what strategies might work best.
“While many companies offer tuition reimbursement, a small number now offer student loan repayment programs,” PSCA explains. “Tuition repayment plans continue to be popular with an overwhelming majority (70.1%) offering these benefits. Although only 1.4% offer student loan repayment plans, 11.5% are considering it and nearly 30% are undecided.”
NEXT: Employers warming to the idea of student loan support