PLANSPONSOR - December/January 2020 - 6

PLAN ANALYSIS
Breaking Ground on Student Debt
T
he concept of employee " financial
wellness " has received a great
deal of attention over the past year,
with no less than a half-dozen pieces of
thought leadership on the topic published
on PLANSPONSOR.com. Alight's 2019
" Hot Topics in Retirement and Financial
Wellbeing " report meanwhile found that
the percentage of employers " very likely "
to create or focus on financial well-being
programs beyond the topic of retirement
planning has more than doubled in the
past five years, jumping from 30% in
2014 to 65% in 2019.
The driving force of this movement
is likely less focused on helping participants
save more than helping them better
manage their debt. This past May, the
Federal Reserve's " Quarterly Report on
Household Debt and Credit " noted that
total household debt rose for the 19th
straight quarter, with unpaid student loans
being a major point of concern among the
press and policymakers. Loan balances
have more than tripled since 2004 and
now stand as the largest source of nonmortgage
consumer debt-affecting more
than 20% of American families.
Employers have also taken notice and
are slowly rolling out programs to help.
The Employee Benefit Research Institute
(EBRI)'s 2019 Employer Approaches to
Financial Wellbeing Survey found that
over a third (34%) of employers reported
offering or planning to offer a student
loan debt program. Such programs could
include student loan debt consolidation
and refinancing services or a student loan
repayment subsidy that is employer paid.
While the EBRI number sounds
high, it is, significantly, emphasizing
the " planning to offer " set of employers
(24%). The PLANSPONSOR Defined
Contribution (DC) Survey found that
the percentage of plans offering student
debt repayment and/or reimbursement
programs has increased in each of the past
two years, almost doubling from 1.7% of
respondents in 2017 to 3.2% in 2019-an
88% increase. That is impressive growth
but still nearly insignificant in terms of
overall adoption. The industry, overall,
is slow to change. Adoption would need
to grow at about 35% per year to cross
50% by 2029. However, such programs
significantly trail more established
" savings and reimbursement " benefits-
for example, tuition reimbursement
programs at 76.8% of mega plans and
at 47.8% of plans overall. Interestingly,
adoption of tuition reimbursement has
grown over the past two years.
Our data find that employers are far
more willing to offer general education
or advice about student debt than they are
to supply formal programs. This may be
because the former is generally less costly
than the latter, but it might also be a first
step, simply derivative of the fact that financial
wellness offerings are taking root.
In general, our survey found an
across-the-board increase in education
and advice offerings related to financial
topics, and it is reasonable to assume that
student debt would be addressed. In fact,
the percentage of plans offering no advice
at all continues to drop-from 44.3% in
2017 to 37.6% in 2019. -Brian O'Keefe
Plans Offering Programs in 2019 to Help
Employees Pay for Higher/Continuing Education
Tuition Reimbursement Programs
71.5% 74.2% 76.8%
47.8%
21.9%
Overall
Micro
Small
Midsize
Large
Student Loan Repayment/Reimbursement Programs
Mega
46.8%
3.2%
Overall
1.3%
Micro
3.1%
Small
5.0%
Midsize
5.6%
Large
Student Debt Information Included in Participant Education
43.0%
30.2%
14.7%
Overall
5.9%
Micro
20.4%
10.1%
Small
Midsize
Source: 2019 PLANSPONSOR Defined Contribution Survey
Large
Mega
4.3%
Mega
6 PLANSPONSOR.COM December 2019 - January 2020

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PLANSPONSOR - December/January 2020

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