Two years ago, we released a report surveying employers about financial wellness benefits. We found that employers feel there is room for improvement in the benefits they offer to their employees.
Earlier this year, we surveyed employees and found that “71 percent agree or strongly agree that employers should help workers and their families manage student loan debt,” making the argument that to improve financial wellness benefits employers should include assistance with student debt.
According to Prudential, 83% of employers are offering financial wellness benefits, a 20 percentage point increase from 2 years ago. However, very few of the financial wellness programs they describe include a student loan assistance component.
Financial Wellness is a Catch-All Term that Could Mean Anything
Employers understand that workers with financial problems are less productive and disengaged. Saving for a car, house, retirement, or college requires financial savvy which isn’t an inherent skill and causes financial stress on employees. Therefore, employers adopt financial wellness programs with online classes, workshops, financial coaching/counseling, and money management software in an attempt to build those fiscal abilities.
Companies offer these perks believing employees will self-advocate and somehow cure their debt by following advice such as shopping for generic brands or moving their savings into index funds.
Employees are unlikely to use financial wellness benefits in the first place. Most voluntary benefits like these have historically low opt-ins. Even retirement benefits such as 401(k) are underutilized. According to Census Bureau data, out of the 79% of employees with access to an employer-sponsored retirement plan, only 41% have opted in.
Employees leave approximately $24 billion in 401(k) contributions unused each year. Nearly half of Millennials have less than $5,000 saved for retirement. Simply put, it’s difficult to take advantage of a retirement plan when you’re trying to get out of debt.
Employers Providing Financial Wellness Benefits Can Make Their Programs Complete
The workforce is swelling with employees carrying student debt. According to the Federal Reserve, the national student debt is $1.5 trillion, more than credit card debt and auto debt. While all types cause financial stress, student loans carry the highest long-term impact and require specialized repayment assistance.
The problem with student loan repayment is that it requires much more than basic budgeting practices to master. The sheer number of repayment options for federal student loan repayment requires a financial aptitude beyond traditional financial wellness programs.
Financial wellness benefits are still an effective way to reduce presenteeism and turnover, but offering an incomplete financial wellness program isn’t enough to make much of a difference assisting employees with the 2nd greatest form of debt.
IonTuition Fills the Gap in Financial Wellness Programs
IonTuition is an online financial wellness solution focused on student loan repayment. We provide in-house concierge counseling from experienced experts on student loan repayment, something no other financial wellness program can offer. Contact our experts today to discuss the right options to fortify your financial wellness program.