#FutureOfWork: How Student Loan Repayment is the Backbone of HR
The future of work starts with HR, where core policy changes are made which affect employees, employers, and the company’s productivity. Challenges like data-disruption and high turnover have provided HR will continue into 2020.
In an era of all-time-high employee turnover rates, financial instability, and constant change, finding a solid cornerstone of an HR strategy is crucial not just for success, but for survival.
Student loan refinancing and repayment programs are set to become the backbone of HR programs rather than a complementary benefit. Here’s why.
Curing the Turnover Epidemic
According to the Work Institute’s 2018 Retention Report, employee turnover in the US was 28.6% and is set to rise to 33% by 2020. In fact, already 66% of millennials are planning to leave their jobs by 2020. The average cost to employers is $15,000, meaning that increasing employee turnover is a huge money leak. When you combine these high rates with additional time and money spent on hiring and training new talent, high turnover is an epidemic.
“The biggest change in HR stems from the strong job market, ” says Barry Ackerman, Founder of Supportive HR. “Companies have to try harder than ever to retain their employees.”
Since 77% of employees who quit could have been retained, employers have a chance to cut down on the turnover rate. Some changes in the workspace are already noticeable, such as more flexible schedules or completely remote options.
But an emerging solution is student loan debt refinance and repayment benefits.
Despite benefits being the reason for leaving for only 9% of employees, 90% of recent graduates would stay with a company for five years if they receive student loan support. However, student loans don’t just apply to young Millennials and Generation Z. According to Chamber of Commerce, 62% of borrowers are older than 30.
With the federal debt alone amounting to $1.6 trillion with no end in sight, nearly every employee is going to have some student loans in the near future. With this in mind, student loan repayment could help change the tides in the turnover epidemic.
Data-driven HR tech has disrupted the industry. Now, it’s easier to understand and predict trends in the workplace, find weaknesses, and build strategies.
Big Data can help HR professionals better understand how employees truly view their company, and this, in turn, helps them to write better job descriptions and internal materials. From figuring out potential problems to measuring performance, the more data you have, the better.
Student loan repayment programs add their own quantitative and qualitative datasets to the equation. You can monitor your employee’s journey to financial freedom, and combined with other analytics, you can better understand their needs as individuals and as a group.
The money and time saved through student loan repayment initiatives can be repurposed to improve your retention and productivity in other areas.
“It’s much more cost-effective to invest money in employee retention than to rehire. You need to find out what it will take. It could be more money, training, options to work remotely, or something else entirely.”
In the fast-changing workplace, reskilling and upskilling are critical to staying on top of customer needs. Instead of constantly retraining new hires, you can focus on helping your current employees grow to handle more complex and fulfilling responsibilities.
At the same time, you can create a more inclusive workplace. According to Student Loan Hero, women hold two-thirds of student loan debt and students of color are impacted disproportionately. For example, black students take out more in federal debt than the average student – 77% vs 60%, and are more likely to default due to insecurity.
Student loan repayment doubles as support for your diverse staff, which also helps your company. According to EY, companies with the most diversity are 15% more likely to have financial ROI above the national median.
#FutureOfWork is Now
Since 2017, we have been using the term “future of work” to describe the rapidly changing marketplace it’s clear that the gap is closing fast. The supposed future is quickly becoming our present.
“Communication is key,” Barry explains. “Companies need to better empathize and check up on their employees. Each business is different and each employee is different, so conduct stay-interviews to understand their needs and learn how to retain them.”
Student loans affect so many employees that repayment and refinance benefits stand out as the backbone of the future of HR. If companies help their employees deal with debt, employees can not only save both time and money but also repurpose these resources to accelerate growth.
Contact us below to learn more how about Vault’s student loan repayment platform can be integrated into your company’s benefits package.