Stu­dent loans as re­ten­tion tool?

There’s a grow­ing con­sen­sus that help­ing young em­ploy­ees pay back stu­dent loan debt could be key to re­cruit­ing and re­tain­ing mil­len­nial tal­ent at credit unions.

Credit Union Journal - - Front Page - BY NATHAN DICAMILLO

WHEN MIL­LEN­NI­ALS TALK ABOUT money, they of­ten use the sobbing emoji. Col­lege debt is com­pared to slav­ery, and acronyms like FOMO (“fear of miss­ing out”) epit­o­mize a de­sire to be free of anx­i­ety about the fu­ture and to live in the present.

These are just a few of the ways mil­len­ni­als ex­press neg­a­tive feel­ings about money on­line, ac­cord­ing to a report by the Fi­lene Re­search In­sti­tute. With col­lege tu­ition prices and the need for more ed­u­ca­tion in­creas­ing, col­lege debt con­tin­ues to be a large part of post­grad life. But Fi­lene, along with a new­comer to the credit union land­scape, be­lieve stu­dent loan re­pay­ment pro­grams may be part of the an­swer for credit unions hop­ing to at­tract and re­tain mil­len­nial tal­ent.

Ac­cord­ing to a re­cent report from CU Ben­e­fits Al­liance, a ben­e­fits-con­sult­ing firm for that aims to im­prove how fi­nan­cial in­sti­tu­tions de­sign their ben­e­fits plans, credit unions that of­fer loan re­pay­ment pro­grams can bet­ter at­tract and re­tain mil­len­nial hires. The group rec­om­mends the af­ter-tax ben­e­fit be be­tween $50 and $200 a month or a match­ing sys­tem sim­i­lar to 401K pro­grams. The pro­gram can be ad­ver­tised dur­ing the job in­ter­view process, new hire stage or dur­ing open en­roll­ment.

Chris­tian Fi­nan­cial Credit Union, based in Ro­seville Mich., im­ple­mented a stu­dent loan re­pay­ment pro­gram in 2014. The ini­tia­tive, a flat amount and pre-tax ben­e­fit, be­gan af­ter Rebekah Mon­roe, the CU’S mar­ket­ing man­ager, par­tic­i­pated in a re­search pro­gram that stud­ied how a loan re­pay­ment pro­gram might at­tract mil­len­ni­als.

“Stu­dent loan debt was the force be­hind this idea,” Mon­roe said. “You have mil­len­ni­als com­ing into the work­force with thou­sands of dol­lars of stu­dent debt. Af­ter talk­ing with our CEO about how we could im­ple­ment this, I worked with the HR team to de­velop the ma­te­ri­als and frame­work.” Eleven of the CU’S 120 em­ploy­ees have taken ad­van­tage of the loan re­pay­ment pro­gram.

To qual­ify, Chris­tian Fi­nan­cial em­ploy­ees must ob­tain a bach­e­lor’s de­gree from an ac­cred­ited school in a ma­jor that ap­plies to their job ti­tle. They also have to pro­vide a state­ment from a stu­dent loan provider and proof of grad­u­at­ing. Em­ploy­ees can take ad­van­tage of the ben­e­fit af­ter one full year of em­ploy­ment, and the to­tal re­pay­ment amount is $8,750 over the course of five years.

SETS CUS APART

When the pro­gram was launched, Fi­lene pre­sented it at their Big Bright Minds con­fer­ence. “I think this is some­thing that can set CUS apart and make them a de­sired place to work for mil­len­ni­als or any­one who is grad­u­at­ing from school,” Mon­roe said.

Mon­roe be­lieves these pro­grams set her credit union apart from other fi­nan­cial ser­vices providers in the area, such as Detroit-based Quicken Loans.

“The fact is mil­len­ni­als will be the ma­jor­ity of the work­force in three years,” said John Har­ris, pres­i­dent of CU Ben­e­fits.

Cit­ing the fact from that 70 per­cent of col­lege grad­u­ates fin­ish their ed­u­ca­tion with debt, ac­cord­ing to the In­sti­tute of Col­lege Ac­cess and Suc­cess in 2013, Har­ris said he be­lieves that monthly as­sis­tance helps re­tain young hires longer. Ac­cord­ing to Stu­dent Loan Hero, a stu­dent who grad­u­ated in 2016 car­ries an av­er­age stu­dent loan debt of $37,172. One in­ter­nal study of CU Ben­e­fits Al­liance part­ners showed 90 per­cent of work­ers stayed with an em­ployer partly be­cause of stu­dent loan con­tri­bu­tions.

While sta­tis­tics on em­ployee re­ten­tion rates are not sep­a­rated based on age, CUNA econ­o­mist Mike Schenk has rea­son to be­lieve credit unions are hav­ing dif­fi­culty re­tain­ing mil­len­nial hires. Turnover at credit unions on av­er­age in 2016 was 16 per­cent. That same year, the turnover rates for en­try-level and part-time credit union jobs — the po­si­tions mil­len­ni­als would nor­mally fill — were as high as 25 per­cent and 24 per­cent, re­spec­tively.

Adding to this turnover rate in the broader econ­omy, there seems to be a skills mis­match in the mar­ket place, Schenk said, which may sug­gest mil­len­ni­als don’t re­al­ize what skills they need for the kind of em­ploy­ment they are look­ing for. And with the fed­eral stu­dent loan for­give­ness pro­gram at risk, younger work­ers and re­cent grad­u­ates may have even more rea­son in the fu­ture to grav­i­tate to­ward jobs that of­fer loan re­pay­ment ben­e­fits.

“We have some real sig­nif­i­cant fed­eral bud­get chal­lenges,” Schenk said. “The dis­cre­tionary spend­ing is a small piece of the pie. Things like ed­u­ca­tion get looked at con­sis­tently and very closely over time and are more likely to be on the chop­ping block.”

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