February 1, 2018
PUBLISHED BY Phil Albinus
SOURCE Employee Benefit Advisor
Advisers have discovered a surprising new audience for benefits that payoff student loans: Older workers with children still in college.
Due to the rising cost of college — where the average person with a four-year undergraduate degree graduates with $70,000 in debt — tuition benefit experts say workers are signing up for tuition payment programs to help pay the student loans of their college-aged children.
Tuition.io CEO Scott Thompson is seeing this first hand. While he does not have any data to illustrate this phenomenon, he says employers are hearing from their employees about this benefit and more employers are asking for a service that allows them to match monthly tuition payments.
“More and more parents of young people are taking on the student loans of their children. Some do it because they want to and some do it because they have to,” he says.
Older workers are finding that their children are reaching the limits of their college loans much more quickly than they did two or three years ago because of the rising cost of higher education. “If your daughter is … in her third year and she can’t borrow anymore to go to school, she has to go to mom and dad to finance her education,” says Thompson.
“And that turns into a parent loan,” he says.
Thompson points out that some of their clients — which include Staples, Fidelity Investments, The City of Memphis, International Paper — have noticed that the older populations of their workforce are now accumulating significant student debt decades after they have graduated from college in the 1980s and 1990s.
“Employers are trying to help that portion of their workforce. It’s almost a universal problem,” says Thompson, whose research says that 25% to 35% of U.S. employees are dealing with a student loan.
On Jan. 31, Estée Lauder Companies unveiled a Student Loan Contribution program, which will be overseen by Tuition.io, that will contribute $100 toward eligible employees’ student loans each month, with a $10,000 lifetime maximum contribution. The beauty manufacturer, which includes Estee Lauder, Clinique, Bobby Brown and MAC, says that 65% of employees currently participating in the program are millennials.
Laurel Taylor, founder and CEO of student debt relief and refinancing firm FutureFuel.io, says that more U.S. employers are seeing their older workers sign up for this benefit.
Employers are realizing that there are essentially three populations within the workforce that have student debt issues: Generation Y, millennials and now Generation Xers, she says.
Read the full article on Employee Benefit Advisor here.