The stakes could not be higher than they are for your junior employees who are entering the workforce with student-loan debt and at the same time being offered retirement savings plans that can seem too complex to some.
Understanding the Current Landscape of Student Debt
Before you tackle the retirement savings topic with junior workers and new hires, it’s a good idea to understand the breadth and depth of their debt. As of April 2022, student-loan borrowers in the United States collectively owed nearly $1.75 trillion in federal and private student-loan debt, according to the Federal Reserve Bank of St. Louis1. On average, households with student-loan debt owe nearly $58,000, while the typical graduate student-loan debt is $71,0002. The 2021 U.S. Census showed 43 million Americans, or one in eight, carry student-loan debt3 while the high-school Class of 2022 in particular can expect to borrow approximately $40,000 to fund post-secondary school education.4
The figures are as high as they are in part because the cost of education is so high, and less people have the cash to pay for it. And the CARES Act, the stimulus legislation that suspended payment requirements on federal student loans from March of 2020 through August 2022, can be confusing. Many borrowers are not aware that payment requirements will soon resume. As a result, not only are many young workers with loans unaware of the extent of their debt and how it might impact their financial futures, they also could benefit from a plan to address it.