At a time when college students are taking on billions of dollars in debt, many don’t know how to deal with finances and doubt they’ll ever be able to pay back what they borrowed, according to a new survey.
While 62% of the students polled said they felt prepared to stay on top of their college assignments, only 53% were similarly confident when it came to handling their money, according to a survey conducted by financial education technology provider EVERFI and sponsored by AIG Retirement Services, a retirement plan provider.
Rite of passage: Gillette ad features transgender man’s first shave
What’s happening with Sears: Sears buyer Eddie Lampert wants to avoid up to $43M in severance pay from bankruptcy
And with Americans juggling $1.57 trillion in student loan debt, that uncertainty may be making many students feel they’ll never be able to get rid of that burden. While 60% of college students plan to borrow to pay for their education, only 65% of them intend to pay off that debt on time and in full. That’s compared to 88% who said they planned to do the same seven years ago.
“I think that in many cases the debt burden feels overwhelming in the amount of money owed relative to what people are earning,” says Rob Scheinerman, president of AIG Retirement Services. “In some cases, people are unemployed, or underemployed, just makes it feel like it’s an intractable problem.”
Loans aren’t the only debt students are juggling. Among the survey respondents, 46% said they had at least one credit card, 61% got a card at the age of 18 or younger. And the balances are on the rise, with 36% of those young credit card holders owing more than $1,000.
Financial literacy is critical for a group, in which only 34% said they would balance their checkbooks, while 32% would begin stashing money away for a rainy day. And as those students enter the workforce, employers who help address their concerns stand to gain a more interested and dedicated workforce.
“If you want to attract and retain the best talent you want to think about ..what are the benefits that are going to most appeal to that generation,” Scheinerman says. “For a lot of people coming out of college, ways of navigating the student loan burden is important.”
Some firms have begun to implement such perks. Healthcare company Abbott contributes 5% to an employee’s 401(k) and doesn’t require the staffer to match it as long as they put at least 2% of their pay toward whittling down their student loan debt. The Zillow Group, which operates several real estate websites, offers its employees access to a portal called Tuition.io where they can learn how to manage their money, and the company contributes $25 a month toward the staff member’s payment plan.
And the consulting firm PwC pays $1,200 a year for up to six years to help employees shrink their education-related debt.