What to do about student loans?

There’s opportunity for employers in the $1.5 trillion, and growing, debt

The data tells a compelling story. Over 44 million borrowers owe a combined $1.48 trillion in student loan debt. The debt is, unsurprisingly, most prominent among adults age 18-29, 53 percent of whom hold debt.

The average student loan debt among 2017 graduates was nearly $40,000, an increase of 6 percent over the prior year. The increasing debt levels upon graduation are juxtaposed against adjusted earnings that are 20 percent lower for millennials than boomers at a similar stage of life.

Despite the high cost of education, the act of earning a diploma is more valuable than ever. The gap between those with and without a college degree has steadily widened, with the difference in median earnings between a high school and college graduate reaching $17,500 for millennials in 2013, compared to $9,690 for early boomers in 1979.

Each generation has its unique set of challenges, and this is one of our generation’s biggest. As with any challenge, it drives change and presents new opportunities.

These changes and opportunities are prominently seen in areas such as how millennials develop their personal values, employee recruiting, the state’s ability to retain millennials and national politics.

We’re notorious for prioritizing experiences over material objects. To us, an experience can be made around the corner or around the world. We want to be globetrotters, but we work within our constraints to make a meal out with friends equally special and memorable.

We’ve found that the longer-term value of an experience outweighs the temporary gratification of objects, and with limited resources due to higher debt loads, we need to make each dollar count.

The burden of student loans is also a factor in our shifting view of the “normal” progression of major life events, such as owning a home or starting a family, both of which are showing signs of occurring later in life for millennials.

Shifting to opportunities, from a company perspective, employers that offer student loan repayment as a benefit are seeing significant payback on employee retention. Again, the data tells a strong story. Millennials stay at a job 36 percent longer when student loan assistance is offered, according to an FC Consulting study.

Another study found that 67 percent of job seekers are “absolutely” more willing to accept a job offer that includes student loan repayment, but as of 2017, only 4 percent of employers offered it, presenting a differentiated benefits opportunity in a tight labor market.

New Hampshire risks losing qualified candidates to urban areas that represent better job prospects and pay. In order to combat this issue, some communities such as Hamilton, Ohio, have started offering student loan assistance to STEM employees in exchange for agreeing to live in their downtown area for two years.

New Hampshire has a tight state budget, and I’m not suggesting handouts to millennials or others just for choosing to live in a certain location, but if the state wants to take definitive action to combat their aging population, there’s a conversation worth starting.

Finally, the delinquency rate on student loans is 11.2 percent. On $1.5 trillion of federal student debt, that’s a $150 billion budget hole to fill on a national debt that is already steadily increasing.

Nationally, this prompts questions such as: How can we improve the perception of alternative, lower-cost education options such as community college or trade schools? Or how do we incentivize schools that are controlling costs and share best practices?

This point specifically highlights the importance to all generations of solving this problem, as each lost dollar contributes to tax increases or spending decreases.

Student loans have caused challenges for our generation, yet opportunity and innovation are born from challenge. As we navigate this challenge, creative solutions from employers and the state that support the effort to combat the impending student loan crisis could go a long way in building sustainable businesses and communities.

Jordan Bean, a senior associate at Stax Inc. in Boston, can be reached at jordan@jordanbean.com.