Today’s college students have a lot to look forward to: They graduate. They get a job. They move out. And then, come December, they get a reminder — maybe by mail, maybe by email — that their first student loan payments are due.
As if they need reminding.
The average student graduates with $28,950 in student loan debt, according to the nonprofit research organization Institute for College Access and Success. That means each month, on top of rent or mortgage, insurance and car payments, the average college grad is forking over between $250 and $300 in student loan payments. On the bright side, grads are making more money — the National Association of Colleges and Employers lists the average starting salary for the class of 2015 as $50,651 — but many are still having trouble meeting their monthly expenses. It’s hard to shrug off that kind of debt.
Enter Staples. The office supply company announced recently that it plans to help full-time sales associates who are either paying off student loans or in the process of earning a college degree by giving them $100 a month for up to 36 months. Penguin Books, Chegg, Fidelity Investments and PricewaterhouseCoopers offer similar benefits. All told, 4 percent of employers are offering student loan repayment help as a work perk this year, according to a survey from the Society for Human Resource Management, a professional association for human resource managers.
It makes sense to offer college grads this type of benefit. Without it, Staples and company might find their ambitious new hires shopping around for higher-paying positions with their competitors. Offering a little aid can entice young workers to stay with a company longer — and may ease the sting of the benefits they may not get, such as health insurance.
We heard during the campaign season how politicians would deal with federal student loans. The loans were a big talking point — especially for the Democrats. Sen. Bernie Sanders and Hillary Clinton outlined plans to help students refinance loan payments and cut interest rates, reasoning that the federal government shouldn’t profit from student loans. President-elect Donald Trump proposed capping repayments at 12.5 percent of the borrower’s income and offering debt forgiveness after 15 years of full federal loan repayments.
It’s a nice sentiment. But we’re not sold on the idea that lawmakers should be so forgiving. According to the Federal Reserve Bank of New York, since 2004, student loan balances more than tripled to nearly $1.2 trillion in 2014. Between deferments, income-based repayment plans and defaults, that debt is paid back slowly — very slowly. That keeps young adults from doing exactly what a healthy economy needs them to do: start new businesses, take financial risks and buy big-ticket items. Without that infusion of new dollars, our national economy gets bogged down. We all pay the price — especially taxpayers.
The real fix here would be to curb easy access to federal student loans. The more financial aid the federal government gives to students, the more colleges can raise the cost of tuition. If that government money came with more strings attached, such as tying it to schools’ performance on graduation rates, postgraduate job attainment or number of low-income students helped, then we might see those tax dollars have a positive impact while lessening the financial burden leveraged on all of our backs.
Meanwhile, we applaud the companies that are taking matters into their hands. They’ve found a way to attract and keep talented, driven young people, and the extra money each month might keep former students from defaulting on their payments. Offering employees help with repaying loans isn’t a broad solution, but it’s a start. For most recent grads, a good start is all they really need.
Editorial Chicago Tribune (Tribune Content Agency)
