According to an ORC International survey commissioned by PadillaCRT, student loan debt is causing millennials, particularly women, to feel financially unstable—pushing them to delay major life milestones such as marriage, children, and homeownership and to change their level of engagement at work.
The survey found that one in four millennials owes over $30,000 in college debt and predicts that it will take them more than 20 years to pay it off. What’s more: young women are twice as likely to think it will take even more than 20 years to pay off their college debt than young men are.
As the Federal Reserve of New York found, this skyrocketing student loan debt can in many cases be traced back to an oversupply of federal financial aid given out to students — a policy championed by Democrats for decades. When universities know they’re guaranteed to get their tuition money via a student’s federal loan, there’s nothing driving them to lower their tuition costs. However, when payment is less guaranteed, colleges are more likely to drop prices to meet students’ financial capabilities.
Consequently, millennials — again, especially women — are delaying traditional life events, from purchasing a car to getting married, due to their financial instability. These delays impact both their private lives and their engagement at work, as well as their employer’s ability to retain them. In fact, the survey found that “thirty-seven percent of women are less likely to stay with their current employer because of their current financial situation, compared with 25 percent of men.”
“Every month, millennials are making student loan payments, which can feel like a mortgage payment,” said Natalie Smith, senior vice president at PadillaCRT. “This student loan debt impacts millennials of all ages and backgrounds. Given the competition for top talent, employers must update their approach in order to engage and retain millennials, especially among women, who were found to carry a bigger burden of student loan debt.”
What good is offering a 401K as an employee benefit if millennial employees can’t afford to pay into one? It’s hard to save money when you’re living paycheck-to-paycheck, and employees are unlikely to be motivated to work harder if they’re not being offered the appropriate benefits.
PadillaCRT found that 59 percent of millennial workers favor student loan repayment assistance over other benefit options. Therefore, perhaps employers should consider creating millennial-targeted benefits packages that meet the needs of that generation.
PadillaCRT suggests that companies “align benefits and opportunities for involvement with employee preferences and give employees opportunities to choose those that are relevant for their age and stage.” This way, millennial workers can decide which opportunities they want to take advantage of based on what stage of life and financial situation they’re in.
Smith said it is important to engage employees in order to motivate their passions and creativity. They can achieve this by keeping their employees’ ages and life stages in mind when trying to engage them.
“Engaging and retaining millennial employees is a challenge all companies face,” Smith said. “However, companies that understand the personal and financial situations facing millennials after graduation, and then tailor their engagement strategy accordingly, will reap the benefits of a highly engaged workforce that is willing to go the extra mile to drive the company forward.”