BOSTON — College students are taking on more debt than ever. In fact, student loan debt is now second only to mortgages, surpassing credit card balances and car loans.
This trend has college students like Boston College sophomore Ben Thomas of Brookline worried about his future.
“My family and I have estimated that I will be paying somewhere in six figures, with what I will be taking out interest and all that. That’s a number I just can't comprehend at this point," said Thomas.
Crippling student loan debt is becoming more common. "I have so much of this debt to pay back," said Thomas. "And it seems like everyone is doing it."
About 70 percent of students now graduate owing money and the average balance is growing. In 2011, a typical student had a debt of about $28,000. Just five years later, that number had bloated to more than $37,000.
"It’s amazing what young people are taking on in terms of student debt,” said David Chang, CEO of Gradifi, a Boston based company that’s leading a new trend of helping employers develop benefit programs to deal with the high cost of higher education.
"We work with employers to help their employees reduce debt in some form or fashion. So, for the millennials, we help them refinance. We help them pay down existing student debt,” explained Chang.
Paying off old loans for employees can be a smart investment for a company, according to Chang.
"If you think about the typical contribution that an employee gives for a student loan pay down, it's $100 a month, so $1,200 a year. It's not a lot of money relative to the salaries and it’s not a lot of money relative to what it would take to replace that employee," said Chang.
Franciscan Children’s in Brighton just started offering a pay down benefit this year. Human resource director Mary Kohanski said the idea surfaced after she heard a number of young workers say they needed more money because they didn’t expect their student loan payments to be so much.
Turnover was getting too high so Kohanski said they wanted to implement a program that was going to directly impact retention of workers.
This type of benefit has definitely caught Ben Thomas’ attention. He believes it will help companies get, and keep, young workers.
"I think if you are looking to hire some sort of successful graduate out of college, that’s a great way to attract them," said Thomas.
More companies are also helping pay off the student loans older workers took out for their kids or making contributions into college savings account that a parent has established for a younger child.
Cox Media Group