Student loan assistance may be perk of the future
Help with paying down college debt could be key to luring young talent to state
Like most recent college graduates, the last thing Matthew Nelson wants on his mind is student loan debt.
“I feel a lot of pressure regarding my debt and how to pay it off efficiently,” he said. “The sooner that I can pay off my debt, the better.”
It came as a relief to the 22yearold Norwalk resident when his new employer, Barnum Financial Group, announced it was developing a debt assistance program for its employees as they get their careers started.
The Sheltonbased company’s program promises to make payments annually for its new advisers over a threeyear period to help get recipients out of debt quicker. The program also demonstrates what state officials and experts view as a possible carrot for Connecticut employers looking to attract and retain young talent.
“Two of the most important aspects of deciding where to start and build my career are determining the strength of the company’s leaders and their passion for their associates’ successes,” Nelson said. “The fact that Barnum Financial has begun this initiative demonstrates that management really does value its associates.”
Growing trend
Student loan assistance may become the employee perk of the future, according to experts.
“Most of the benefits that companies give their employees are tools used to attract talent and, given the high cost of higher education at this point, I think a tool that a company could use to attract talent could be some type of forgiveness program or paying for the students’ education,” said Michael Carriger, Human Resources Management professor for Sacred Heart University.
Out of the $1.5 trillion — as of Oct. 4 — owed in student loan debt, Connecticut accounts for around $17 billion. On average, Connecticut graduates have around $38,500 in debt after graduating, which is the highest average nationally, according to the Institute for College Access and Success
Most companies already provide some form of education benefits to employees, but those have traditionally focused on employees advancing their education.
Given the state of Connecticut’s economy, Carriger said, there’s an opportunity for state
companies to go a step further in competing for young professionals.
“People have been talking about this war for talent for a long time, and I think that anything in your arsenal you can do to attract the kind of talent necessary to be successful in the current economy would be (good),” he said.
Making it worth their while
The potential to attract millennials to Connecticut and retain them hasn’t been lost on state officials, either.
“We do so well in educating students and then far too many of them pick up and decide to start their careers elsewhere,” said 23yearold Sen. Will Haskell, DWestport. “As the youngest member of the general assembly … I’m concerned that not enough members of my generation are sticking around. … This is personal for me.”
Connecticut is reportedly one of the top interstate migration losers, based on Bloomberg reports.
Data from the Internal Revenue Service and the U.S. Cen
sus Bureau found Connecticut reportedly lost slightly under 2 percent of its annual adjusted gross income in 2017 from people who moved to other states. Those leaving the state had an average income of $122,000, which was 26 percent higher than those migrating in.
The net loss of income topped $2.6 billion that year with Florida being the largest beneficiary of that loss, according to reports from the Yankee Institute for Public Policy.
Outmigration of millennials has also affected employers looking to recruit a tech savvy and talented workforce by making the employment pool shallower, Haskell added.
“We need to modernize how we think about employee benefits so that they are adaptive to the problems that my generation faces for the first time,” Haskell said. “Given this unique problem that millennials are facing, we have to think creatively about how the public sector and the private sector can work together to incentivize this new benefit or enhance it.”
Haskell was one of several lawmakers sponsoring legislation during the last session to offer incentives to employers willing to alleviate student
loan debt for their employees.
The 2019 General Assembly passed a bill allowing eligible employers to claim a tax credit equal to 50 percent of a payment made on the outstanding principal balance of an eligible employee's student loans as of Jan. 1, 2022.
The maximum credit permitted per employee per income year is $2,625.
Qualified employees must live and work full time in Connecticut and have earned a bachelor's degree within the past 5 years.
“We’re never going to be a New York City and we’re never going to be a Boston here in Connecticut, but if we can have an exciting and slightly more affordable alternative (perk), I think that is our path toward attracting young people here and keeping them here after graduation,” Haskell said.
Hindered housing
Aside from the effect on the workforce and business community, experts say student loan debt among millennials could be hurting the real estate market.
“We’ve seen it’s taking longer for (some) millennials to buy their first home,” said Realtor Daniel Thomas of
Re/Max in Bridgeport.
A 2017 report from the National Association of Realtors found that roughly 83 percent of nonhomeowners cited student loan debt as the factor delaying them from buying a home.
“Student loan debt has always been there, but because millennials represent a bubble in our demographic flow, we saw a huge influx of student debt happen with millennials,” said Tammy Felenstein, executive director of sales for Halstead Real Estate in Stamford.
As a result, economists have said in previous reports that firsttime home buyers are opting for flexible housing alternatives including apartments and condominiums, instead of a singlefamily home.
On average, student loan debt delays the purchase of a first home in the state by seven years, according to Haskell.
“If we want to revitalize our housing market here in Fairfield County, one of the best things we could do is help to lift the cloud of student debt and put young people on a more sound financial footing,” he said.