The Solution to Millennial Employment Turnover

August 1, 2018

The Millennial Generation or those born from 1981 – 1996ⁱ seem to be the biggest target for social commentary. Millennials have been blamed for the decrease in napkin sales, the increase in renting versus buying, and have numerous stereotypes like the generation without social skills. If it isn’t clear, Millennials have certainly become the generation every other group loves to hate.

If the lack of social skills weren’t enough, here is another reason people are finding it hard to approve of the millennial generation – the lack of loyalty to employers. Currently, 60% of millennials are open to a different job.ⁱ The loyalty that previous generations had to their employer is lost among the Millennial Generation. There doesn’t seem to be any lost and found box where companies can go to find that lost loyalty, either. Could it be the lack of raises or is it something missing from your human resource offerings?

The average college graduate leaves school with $37,172 in student loan debtⁱⁱ. That college debt is more than any previous generation. When your workers are carrying more debt, they are more conscious of what they are getting paid. Student loan debt can be like a fire for some borrowers, as they need to eliminate the debt as soon as possible before incurring additional damage.

Allow us to put this employee need in perspective for you. Three in five young workers say a higher priority for them is paying off their student loans, not retirementⁱⁱⁱ. What a compelling insight into what young workers are focused on. This provides a perfect illustration of why your traditional Human Resource benefits like a 401K may no longer be enough to keep a young workforce motivated.

Before we continue, let’s clear something up, the problem of student loan debt doesn’t only affect younger workers. Though younger Millennial workers are highly affected, one in five adults, ages 30 to 44, have student loan debt according to PEW research^iv. So what can you do as an employer to address the concern of student loan debt and keep your employee motivated?

We would recommend adding student loan education and assistance to your suite of HR benefits. It’s a no-brainer to add an HR benefit that doesn’t cost your company anything. Yes, you, as an employer would pay nothing to offer this to your employees. Education Loan Finance offers a program where a link can be placed directly into your HR portal. It’s almost effortless to partner with a company and offer this benefit!

Want to blow your employees out of the water? Consider offering to contribute to your employee’s loans. You’ll never have problems with employees leaving, at least while they have student loan debt anyways. There are multiple different methods available to offer student loan contribution to your employees. You could offer a type of sign on bonus payment to be applied directly to the principal of the loan. These types of bonuses are great for the holiday season, sign-on bonuses, or reward for a job well-done. A second popular method of contribution is a monthly payment. Below is a chart we’ve put together to illustrate how employer contributions can have a huge impact on student loan debt. Take a look for yourself and see how an employee with student loan debt could be easily motivated based on this simple and free HR benefit.

Total Employee Loan Debt	Loan Lifetime	Interest Rate	Annual Employer Bonus	Total Employee Savings
$37,000	10 years	6%	$1,000	$10,269
$200,000	7 years	6%	$1,000	$5,843
$200,000	10 years	6%	$1,000	$11,102

If you aren’t sure if student loan repayment assistance is right for your company that’s okay, but keep that in mind any time you receive a two-week notice from an employee. There are multiple plans available to help your employees navigate their way through student loan debt repayment.

Common offerings an employee can gain by working with a company may include employer contributions, student loan refinancing, and educational tools. So how does an employer add this to their employee offerings? It’s simple, by partnering with student loan refinance companies like Education Loan Refinance; you have the opportunity to make student loan debt assistance benefits a reality for your employees. Now, there is no guarantee that offering benefits to employees will keep them from leaving. Aside from benefits, there are billions of reasons people leave jobs. For younger generations like the always loved Millennials taking on more and more debt each year, this is a MUST. To be considered groundbreaking and modern, your company will need to be offering student debt assistance.

Learn How ELFI for Business Can Help You

ⁱ http://www.elfi.com/elfiforbusiness/
ⁱⁱ http://news.gallup.com/businessjournal/191459/millennials-job-hopping-generation.aspx
ⁱⁱⁱ https://www.creditdonkey.com/average-student-loan-payment.html
^iv https://d9jmqzwnxk1s1.cloudfront.net/wp-content/uploads/2018/08/14141823/asa_young_worker_and_student_debt_survey_report-1.pdf
^v http://www.pewresearch.org/fact-tank/2017/08/24/5-facts-about-student-loans/

Top 4 Reasons Employees Leave a Company

The current employee shortage has upended traditional hiring models. Companies are racing to reshape their corporate cultures and embrace the values of a more limited workforce. Although improved pay and benefits packages continue to be important, these four workplace problems are the leading reasons why employees pick up—and move on.

Not enough work-life balance. Team members value their time and don’t want employers to waste it. Their enthusiasm and performance will wane if they are weighed down with busy work and meaningless meetings. Younger employees appreciate flexible schedules, the ability to work from home, and a workload that is challenging without spilling over into personal time.
Poor management. Supervisors who are unable to engage their employees or unwilling to help them grow by providing positive feedback are commonly cited as reasons to leave. Today’s professionals respond to personal interaction and appreciate public shout-outs and ancillary rewards like gift cards, tickets, and free meal vouchers.
Lack of recognition & career advancement. Employees who excel like to be recognized for their extra effort. They also need to see a clear pathway for furthering their careers. Today’s staff members expect companies to help them grow professionally while providing access to career development and mentorship programs.
No company engagement. When a company does not have (or cannot properly communicate) its goals and values, employees lack a shared sense of purpose. Businesses fostering a sense of community are better able to inspire, engage, and retain employees.

Create a Satisfying Workplace to Keep Valuable Team Members

In many ways, today’s workforce is looking for the same type of job satisfaction as high performers of past generations. Respect, appreciation for a job well-done, opportunities for advancement, challenging work, and monetary rewards still lead to employee satisfaction and engagement. According to Gallup research, 34% of employees are engaged at work, but 53% are not engaged and likely to leave a job for another offer. To involve these employees and access their potential, employers are putting greater emphasis on corporate culture assets like these:

Relevant workplaces with a clear mission & shared values
New-hires who contribute to the corporate community
Greater creative freedom & autonomy for staff when possible
Updated technology to support performance
Employee input as valuable business partners

Learn More About The Act Regarding Student Loans and Employers

Student Loan Benefits Appeal to Workers of All Ages

Many young employees begin their careers with a heavy burden of student loan debt. They worry about the monthly toll payments will take on their starting salary. Will they have enough money to travel, buy a home, or start a family? Worries about student debt repayment are not limited to the youngest workers. Some data suggest that these concerns cut across age groups and include professionals over age 55. Older workers may have taken on student loan debt to fund advanced degrees or send a child to college. Widespread student loan debt suggests that companies offering repayment contributions and other related benefits have a distinct advantage in attracting and engaging their workforce.

Improve Retention With Cutting Edge HR Benefits From ELFI

As an ELFI business partner, you can add value to your benefits package with monthly contributions to student loan debt. You’ll also plug into resources like newsletters, webinars and onsite consultations. Connect with ELFI from your HR portal and discover how significant student loan benefits are to your team members—and how cost-effective they are for your company.

Tops Ways to Engage Millennials at Work

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2019-06-12

Should You Pay Off Student Loans Immediately or Over Time?

When you start your post-college career, you may be tempted to breathe a sigh of relief. Before you do that, you have important decisions to make. You’ll have to stretch your paycheck to cover your new lifestyle and associated expenses: a furnished home or apartment, vehicle, insurance, and hopefully a 401K contribution. If you are like 70% of college graduates, you also have student loans that need to be repaid. In most situations, it's going to be most beneficial to pay off your loans as quickly as possible so that you are paying less towards interest. The average college graduate's starting salary, however often cannot allow for enough additional income to cover more than the regularly scheduled student loan payments. Most student loans have a six-month grace period so you can do some budgeting and planning first - if you need to. We don't suggest using the grace period unless you find it necessary to organize your finances. During a deferment such as a grace period, the interest could still be accruing depending on the type of loan that you have. If you determine that you may be better off establishing sound financial footing and a workable monthly budget before you begin repaying those daunting loans. Keep these tips in mind as you formulate a strategy for debt payoff.

Student Loans Have Advantages

Varying types of debt are governed by different laws and regulations. Banks often base interest rates for consumer credit loans on your established credit rating. Interest rates for auto loans or credit card debt tend to be higher than a mortgage or student loan interest. As you review your debt load and make a plan, remember: student loan debt comes with a few "advantages" that other types of debt don’t offer.

Preferential tax treatment: With a new job, you will be paying taxes on your income. Student loan interest is deductible up to $2,500 and can be deducted from pre-tax income.
Lower interest rates & perks: Federal student loans have lower interest rates and are sometimes subsidized by the government.
Lender incentives: Private student loans may come with incentives from the lender that make them a better deal than other credit types. These include fee waivers, lower interest rates, and deferment options.
Flexible payment plans: Options for lower payments and longer terms are available for both federal and private student debt.
Build your credit score: You can build your credit score with student loan debt. Now, depending on whether you’re making on-time payments or not, you could negatively or positively affect your credit. If you chose to make small payments during deferments, or a grace period, and regular on-time payments you will be more likely to establish a favorable credit record and reduce the amount of interest you pay overall.

Programs to Help You With Student Loan Payments

There are few options for loan forgiveness with regular debt, but student loans offer opportunities to reduce or eliminate your debt. These may come with commitments and tax implications, so be sure you fully understand them if you decide to take advantage of these programs.

Loan forgiveness: Federal student loans may be forgiven, but you'll want to be sure that you're following all of the requirements needed of the program. Be sure before choosing this option that the federal loans you have qualify for the program. Also, keep in mind there could be taxes due on the amount that is forgiven. Some student loan forgiveness programs include PAYE (Pay as You Earn) and REPAYE (Revised Pay as You Earn), Public Service Loan Forgiveness, and Teacher Loan Forgiveness.
Loan Consolidation: Multiple student loans can be consolidated into one payment with the interest rate determined by a weighted average of your current loans - interest rates. Combining multiple loans may be easier to manage on a modest starting salary. Consolidating federal loans usually doesn’t require a good credit score, either.
Refinance, and you could achieve a lower interest rate: Lenders like Education Loan Finance specialize in student loan refinancing, and have options like variable interest rates and flexible terms. Refinancing your debt could make student loan debt easier to manage than other types of credit.

Pay Off High-Interest Debt First

Before you decide to pay off your student loans, think about the financial obligations you’ll be taking on. Instead of carrying a credit card balance or making low payments for an auto loan, it makes sense to continue your low student loan payments and pay off more expensive debt first or debt with a higher interest rate. In the long run, you’ll save money and build your credit score. If you still have doubts about not paying off student debt first, consult a professional financial advisor for help prioritizing your goals and setting up a budget that lets you achieve them.

Click Here to Learn More About Student Loan Repayment

Friends on a Boat on vacation enjoying their time before starting school

2019-05-20

Responsibilities of Cosigning A Loan

It’s often thought about pretty commonly that people will attend college. What often isn’t discussed is how people will afford to pay for their college degree. When looking for available financial aid options many look to private student loans to pay for college. Once completing the application don’t be surprised if it is denied because of your financial history or lack thereof. Unless your parents opened up a credit card account for you as an authorized user when you born, you probably won’t have a long enough credit history. Don’t be overly heartbroken, since you aren’t the only one without a long credit history. A way around not having an established credit history is to talk with a parent or guardian about being a cosigner on your student loan. This isn’t an easy process, but it can be worthwhile if both parties understand the responsibilities that are associated with cosigned student loans. Additionally, adding a cosigner to a loan may not be the right answer. Having a cosigner can help qualify you for a student loan because the right cosigner should have an established credit history. As a lending institution, it would be too difficult to lend to a borrower who hasn’t yet shown that they are financially responsible. Adding a cosigner who is financially responsible, for a loan assures the lender that the loan is less of a risk and is more likely to be paid back. If you like sports, think of it like a basketball game. If you’re injured and can no longer play, a substitute or someone on the team plays the game in your place. A cosigner would be your financially responsible substitute in the game of loans. If you are unable to carry the financial burden of a loan at any time and take a knee, a cosigner is expected and legally responsible to repay the debt. Though the concept of adding a cosigner can seem fairly simple, there is a lot that goes along with it. Here are a few things to understand, before you even consider asking someone to cosign your private student loan.

Why would you need to add a cosigner to a loan?

There are multiple different cases why you may need a cosigner. If you have never owned a credit card, had a loan before or held any type of credit, you may have no established credit history. Even if you have had credit for a short time, there may not be enough history for the private loan company to evaluate. If you have a large loan you’re interested in taking out, it’s highly unusual that the loan will be provided to someone with a year or less of credit history. Based on your credit history a student loan company can see how often a person is paying off debt and what their credit score is. Without a credit history, it can be hard for a student loan company to evaluate if you will be on time for loan payments. With a cosigner, the student loan company can evaluate the financial history of the cosigner and see that they are a reliable applicant. Another reason that you may need a cosigner is that you have a bad credit score. If your debt-to-income ratio is too high, you have an unsteady income, or you have previous defaults on your credit history, this could be a reason why you’d need to add a cosigner. A cosigner can help qualify you for a private student loan. When having a cosigner, it is the cosigner’s loan and they are fully responsible for that loan too. Though your cosigner is not using the loan, it is equally their responsibility to make sure the loan is paid off. If you choose to ask a family member or friend to be a cosigner, it is important they understand the financial responsibility that they are taking. For example, if you do not pay your loan, your cosigner will have to pay it off. A cosigner will need to have a good credit history and consistently have responsible financial habits. You may be thinking of multiple different people who could be your cosigner. Before diving in, be sure to understand who can cosign your loan.

Who can cosign a loan for college?

When evaluating the need for a cosigner, you will need to know who is eligible. Undergraduate and graduate private loans lenders have a list of criteria that a cosigner must meet. The criteria for a cosigner will be different based on each lending institutions policy and eligibility requirements. Here’s a breakdown of some of the general eligibility requirements needed.

A cosigner must be a United States citizen and of legal age.
Legal age will vary by state, so it is important to look up the legal age for your state of interest.
As for your preference, it needs to be someone you trust. Maybe start by asking a parent or close relative.
Needs to have a good credit score, and has to know all the financial responsibilities of a cosigner.
The cosigner will be required to have a consistent employer or a steady income. If a family member is not an option, consider a dependable, close friend.
Some private loan companies require that the cosigner have the same address as the applicant.

Cosigner Responsibilities

Make sure your cosigner fully understands what they are committing to and that you both discuss the responsibilities needed from a cosigner. Being a cosigner can be unpredictable. As a borrower, you may not be able to pay off a loan that you have taken on and your cosigner will be accountable for the remainder of the student loan payments. This could affect a cosigner and their future. Go over the cosigner paperwork and discuss all the options you have. You both will have equal responsibility throughout the life of the loan. Cosigner responsibilities include payment on any late or missing payments as per the contract of the private loan. The cosigner’s credit report will show the student loan, therefore, any late payments will affect the cosigner’s credit score. A cosigner, by cosigning, is adding more credit to their credit history. Therefore, if the cosigner needs their own loan, they may find it difficult due to the additional credit added from the private loan. A creditor may have different ways of collecting loan debt, but they can garnish wages depending on the state the loan is originated in. If the loan is not paid, you or the cosigner’s employer may be required to refuse a portion of your paycheck and send it to the creditor. In addition, a private loan may have clauses included in the document. Be aware that a clause may require the loan amount paid in full at the time of a cosigner’s death. Meaning if you ask someone to be a cosigner and they pass away the debt may have to be paid in full at that time. The same can go for the cosigner if the borrower passes away, the full debt balance could be expected at the time of the borrower’s death. Open communication between you and your cosigner is vital. Go over all clauses, liabilities, and possibilities to ensure you are both aware of the circumstances.

Factors to consider when selecting a cosigner

A cosigner needs to be someone who is completely able to pay off your loan. The private loan company will want to see that the cosigner has a steady income. A steady income means that they have reliable employment or a consistent form of payment. Without a steady income, the loan company will have no evidence that your cosigner has the funds to help pay off the loan. Your cosigner will need to have a decently lengthy credit history. Along with the cosigner’s credit history, the lender will review their credit score. A credit score will illustrate to the loan company that the cosigner has borrowed money previously and was able to pay it back on time. A private loan company is always looking for a trustworthy candidate that will be capable of paying back their debt. While the loan company will decide if you and your cosigner are qualified, it is important that you have a dependable cosigner. Cosigning will be a long term commitment and all clauses must be considered. Good health will be a factor when choosing a cosigner. Good health may seem like an odd qualification to have. If your cosigner dies, your loan could automatically be placed in default regardless of the payments you have made. Due to unfortunate circumstances, this could have a harmful effect on your credit score. Whether it a relative or close friend, you and your cosigner must be on the same page. Once you have a loan you both will share the responsibility of getting it paid off. Talk about financial barriers together. If you are unsure you can pay off the loan, let your cosigner know ahead of time. This could help prevent any devastating effects on your credit scores in the future.

Benefits of using a Cosigner

While having a cosigner is a serious decision, it does include benefits. One of the biggest advantages to adding a cosigner is that it could help you to have a better interest rate. Adding a cosigner with a good credit history, and income, private loan companies may give you a lower interest rate. How can having a cosigner get you a lower interest rate? Since your cosigner should have an established credit history and income, it means that the loan is less risky for the lending institution. If the loan is more likely to be paid back based on previous borrower history, then the lending institution will provide a more attractive interest rate on the loan. Having a lower interest rate on your loan could mean thousands of dollars saved from debt repayment. Secondly, having a cosigner could assist you with your own credit. Since a cosigner gives you a better chance at receiving the loan, you’re more likely to establish the credit to further build out your credit history. Assuming you’re able to make the monthly payments on your student loan, you will start to build a credit history. If you are paying on time, this will help you to improve credit for future needs and purchases for both you and cosigner. Without a cosigner, you may not be eligible for the loan and would not be able to get a jump start on your credit. Cosigning for a debt is not something that should be taken lightly by anyone. This could be the right answer for you or it could be the wrong answer. It’s important to review all your options as a borrower and discuss the liabilities and responsibilities of cosigning with your cosigner.