Does it seem like more grads have more student loan debt than ever before? That’s because they do.
According to a recent report from the Consumer Financial Protection Bureau (CFPB), the percentage of student loan borrowers owing $20,000 or more at the start of repayment has more than doubled since 2002. On top of that, many grads are waiting longer to start repayment, and taking longer to pay off their student loans.
With many younger workers wringing their hands over student loan debt, and employers wondering how to attract top millennial talent, there’s an opportunity. What if more companies offered student loan repayment benefits — and the government offered a tax benefit? Here’s why a rise in graduates with more student loan debt should motivate employers to offer student loan repayment benefits.
Why do so many people have student loan debt?
Gone are the days when someone could work for a summer and cover tuition for the entire year. According to the Bureau of Labor Statistics, the Consumer Price Index for college tuition and fees increased 63 percent between January 2006 and July 2016. Compare that to an increase of 21 percent for all items — and that’s just tuition and fees. Housing at school (excluding board) increased 51 percent.
That’s a pretty big jump over 10 years. College Board tracks changes in average tuition and fees over time. In 2001-02, the average public four-year, in-state tuition and fees plus room and board was $12,245. The average cost for the 2016-17 school year? $20,092.
No wonder the CFPB reports that more than 40 percent of student loan borrowers leave school owing $20,000 or more. Just paying for one year of school costs that much. The number of borrowers owing $50,000 or more upon leaving school tripled between 2002 and 2016. There’s a reason some experts are worried about a student loan bubble.
Graduates feel the pinch of student loan debt
It’s no surprise that graduates are feeling the pressure. A Student Loan Hero survey found many Americans with student loan debt put off key financial and life milestones as a result of their student loan debt.
Millennials also cite “too much debt” as their number one money stress. Student loan debt is the second-most stressful type of debt they carry (after credit card debt). Add in the fact that wage growth — even for those with a college degree — has been largely stagnant in recent years, it’s not hard to see why millennials struggle.
And it’s not just millennials suffering as a result of this situation. The combination of rising college costs, higher student debt, and stagnant wages has also contributed to student borrowers waiting longer to pay off debt. The CFPB report found that half of student loan borrowers are older than 34 when they start repayment. Plus, the percentage of consumers beginning repayment under 25 has decreased from 30 percent to 15 percent.
Finally, 30 percent of borrowers are not paying down their loan balances after five years in repayment. “[E]ven if borrowers are making payments, those payments are not enough to cover the interest on their loans. Therefore, the amount of principal is the same and the overall amount of debt is the same or more,” said the CFPB in its press release.
All of this represents an opportunity for employers to step in and help their workers pay down student loan debt.
Companies that pay off student loans attract and retain talent
It’s clear that their financial situation stresses American workers — for 53 percent of them, that stress gets in the way of work performance. On top of this productivity issue is the worry about turnover as millennial talent is difficult to retain. Polling organization Gallup estimates that millennial turnover results in a loss of $30.5 billion to the U.S. economy every year.
Employers looking to retain millennial talent and increase worker productivity can offer student loan repayment benefits. Offering these benefits can provide companies a way to reduce financial stress related to student loans, and encourage millennials to stay.
However, companies have been slow to adopt student loan repayment benefits. According to the Society for Human Resource Management, only 4 percent of employers offer financial aid to help employees repay student loans. This represents a huge opportunity for employers who want to stand out in the competition to attract millennial talent.
How to motivate employers that don’t offer student loan repayment benefits
The government can even help if Congress passes a law to provide companies with a tax benefit for offering student loan repayment benefits. Currently, a bill meant to extend tax exclusion to employer-provided student loan payments languishes in the House of Representatives without moving forward.
Even though there isn’t an extra tax break for this benefit, there are some companies that pay off student loans. Student loan borrowers looking for help with their student loan repayment can consider these employers, which include powerhouses Fidelity and PricewaterhouseCoopers, as well as fintech startups such as Student Loan Hero and SoFi.
Whether you are a business owner or a student loan borrower, consider contacting your elected officials to encourage them to help borrowers and employers alike by passing bills that provide tax breaks for student loan repayment benefits.
Interested in refinancing student loans?Here are the top 9 lenders of 2022!
|Lender||Variable APR||Eligible Degrees|
|1.74% – 9.51%1||Undergrad & Graduate|
|1.89% – 6.20%2||Undergrad & Graduate|
|2.05% – 5.25%3||Undergrad & Graduate|
|1.74% – 7.99%4||Undergrad & Graduate|
|2.24% – 7.99%5||Undergrad & Graduate|
|1.74% – 7.99%6||Undergrad & Graduate|
|1.86% – 7.98%||Undergrad |
|1.74% – 7.99%7||Undergrad & Graduate|
|2.24% – 9.23%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2022.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
3 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 5/17/2022 student loan refinancing rates range from 2.05% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.93% Fixed APR with AutoPay.
4 Important Disclosures for Navient.
5 Important Disclosures for SoFi.
Fixed rates range from 3.49% APR to 7.99% APR with a 0.25% autopay discount. Variable rates from 2.24% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.
6 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Student Loan Refinance Interest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.24% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.99% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. Let us know if you have any questions and feel free to reach out directly to our team.
7 Important Disclosures for Purefy.
Purefy Student Loan Refinancing Rate and Terms Disclosure: Annual Percentage Rates (APR) ranges and examples are based on information provided to Purefy by lenders participating in Purefy’s rate comparison platform. For student loan refinancing, the participating lenders offer fixed rates ranging from 2.73% – 7.99% APR, and variable rates ranging from 1.74% – 7.99% APR. The maximum variable rate is 25.00%. Your interest rate will be based on the lender’s requirements. In most cases, lenders determine the interest rates based on your credit score, degree type and other credit and financial criteria. Only borrowers with excellent credit and meeting other lender criteria will qualify for the lowest rate available. Rates and terms are subject to change at any time without notice. Terms and conditions apply.
8 Important Disclosures for Citizens.
Education Refinance Loan Rate Disclosure: Variable interest rates range from 2.24%-9.23% (2.24%-9.23% APR). Fixed interest rates range from 4.29%-9.73% (4.29%-9.73% APR).
Undergraduate Rate Disclosure: Variable interest rates range from 5.37%- 8.81% (5.37% – 8.81% APR). Fixed interest rates range from 5.87% – 9.31% (5.87% – 9.31% APR).
Graduate Rate Disclosure: Variable interest rates range from 2.24% – 8.75% (2.24% – 8.75% APR). Fixed interest rates range from 4.29% – 9.25% (4.29% – 9.25% APR).
Education Refinance Loan for Parents Rate Disclosure: Variable interest rates range from 2.24%- 8.40% (2.24%- 8.40% APR). Fixed interest rates range from 4.29% – 8.90% (4.29% – 8.90% APR).
Medical Residency Refinance Loan Rate Disclosure: Variable interest rates range from 2.24% – 8.75% (2.24% – 8.75% APR). Fixed interest rates range from 4.29% – 9.25% (4.29% – 9.25% APR).