Student loan payments have resumed after nearly a three-and-a-half-year hiatus, impacting both workers and employers. Cited in a recent BenefitsPro article, ADP Research Institute has released new data that shows that the return of student loan payments is likely to impact employee retention. ADP researchers found that workers with greater amounts of debt are more likely to leave their jobs. According to ADP, “‘Employees who consider their student loan debt to be a ‘heavy burden’ are 2.4 times more likely to be in the process of leaving their organization’” or seeking a new role. Workers are hoping to land higher-paying jobs in the coming months, which ADP predicted could create a shift in the labor market as they seek better opportunities.
With employee happiness at a three-year low, this trend is one employers should pay attention to. ADP recommends employers seeking to increase retention consider financial education and resources to help employees with budgeting, managing debt, credit basics, and dealing with financial stress. ADP also suggests employers look to provisions in SECURE Act 2.0 starting in January 2024 to help support employees via matching contributions to 401(k)s and other retirement plans based on an employee’s student loans, even if the employee doesn’t contribute themselves.
Another recent BenefitsPro article highlights ways employers can leverage financial wellness and SECURE 2.0 to help improve recruiting and retention and increase employees’ overall well-being. SECURE 2.0 makes it easier and more cost-effective for employers to implement workplace savings programs and offer attractive financial wellness benefits. Offering assistance and resources to help employees manage their finances demonstrates a commitment to their well-being beyond the workplace, according to BenefitsPro.
That’s attractive to potential and existing employees. According to data cited in BenefitsPro, “84% of employers now say that offering financial wellness tools can help reduce employee attrition and 81% of those people say that wellness tools can help attract higher-quality employees.” SECURE 2.0 contains provisions that make it possible for employers to contribute to workers’ student loan debt or their children’s education using 529 plans while also saving for retirement. Implementing such benefits can help employers stand out and attract and retain talent at a time when it appears student loan debt resumption may spur workers to seek out new opportunities.
Addressing financial stress provides other benefits as well, including increased productivity and lower absenteeism, all of which can lead to improvements in your bottom line. As such, investing in your employees’ financial success and well-being is also an investment in your company’s success. Offering financial wellness and retirement savings opportunities as part of your benefits package can help enhance your recruiting and retention efforts, as well as lead to a happier, healthier, more productive workforce overall.
