Category Archives: Student Debt

Student Loans and Homeownership

Source: Alvaro Mezza, Daniel Ringo, Shane Sherlund, Kamila Sommer, Journal of Labor Economics, Ahead of Print, November 13, 2019

From the abstract:
We estimate the effect of student loan debt on subsequent homeownership in a uniquely constructed administrative data set for a nationally representative cohort. We instrument for the amount of individual student debt using changes to the in-state tuition rate at public 4-year colleges in the student’s home state. A $1,000 increase in student loan debt lowers the homeownership rate by about 1.8 percentage points for public 4-year college-goers during their mid-20s, equivalent to an average delay of about 4 months in attaining homeownership. Validity tests suggest the results are not confounded by local economic conditions or changes in educational outcomes.

Tackling Student Debt: How Did We Get Here and What Can We Do About It?

Source: Cristian deRitis, Regional Financial Review, September 2019
(subscription required)

Rising student debt levels command significant attention in social and political discourse. This article explores how we got here, some of the potential long-term consequences of student debt, and offers a proposal for dealing with the problem.

State of the Union: Millennial Dilemma

Source: Stanford Center on Poverty and Inequality, May 2019

The annual Poverty and Inequality Report provides a unified analysis that brings together evidence across such issues as poverty, employment, income inequality, health inequality, economic mobility, and educational access to allow for a comprehensive assessment of where the country stands. In this year’s issue, the country’s leading experts provide the latest evidence on how millennials are faring.

Contents include:

Executive Summary
David B. Grusky, Marybeth Mattingly, Charles Varner, and Stephanie Garlow
With each new generation, there’s inevitably much angst and hand-wringing, but never have we worried as much as we worry about millennials. We review the evidence on whether all that worrying is warranted.

Racial and Gender Identities
Sasha Shen Johfre and Aliya Saperstein
The usual stereotypes have it that millennials are embracing a more diverse and unconventional set of racial and gender identities. Are those stereotypes on the mark?

Student Debt
Susan Dynarski
Often tagged the “student debt generation,” millennials took out more student loans, took out larger student loans, and defaulted more frequently. Here’s a step-by-step accounting of how we let this happen.

Employment
Harry J. Holzer
Labor force activity has declined especially rapidly among young workers. The good news: We know how to take on this problem.

Criminal Justice
Bruce Western and Jessica Simes
The imprisonment rate has fallen especially rapidly among black men. Does this much-vaunted trend conceal as much as it reveals?

Education
Florencia Torche and Amy L. Johnson
The payoff to a college degree is as high for millennials as it’s ever been. But it’s partly because millennials who don’t go to college are getting hammered in the labor market.

Income and Earnings
Christine Percheski
When millennials entered the labor market during the Great Recession and its aftermath, there were uniformly gloomy predictions about their fate. Does the evidence bear out such gloomy predictions?

Social Mobility
Michael Hout
Millennials have a mobility problem. And it’s partly because the economy is no longer delivering a steady increase in high-status jobs.

Occupational Segregation
Kim A. Weeden
Are millennial women and men working side by side in the new economy? Or are their occupations just as gender-segregated as ever?

Poverty and the Safety Net
Marybeth Mattingly, Christopher Wimer, Sophie Collyer and Luke Aylward
Millennial poverty rates at age 30 are no higher than those of Gen Xers at the same age. But this stability hides a problem: Millennials are replacing a falloff in earnings with large increases in government assistance programs.

Housing
Darrick Hamilton and Christopher Famighetti
Housing reforms during the civil rights era helped to narrow the white-black homeownership gap. But those gains have now been completely lost … and the racial gap in young-adult homeownership is larger for millennials than for any generation in the past century.

Social Networks
Mario L. Small and Maleah Fekete
Millennials are not replacing face-to-face networks with online ones. Rather, they’re a generation that’s found a way to do it all, forging new online ties while also maintaining the usual face-to-face ones.

Health
Mark Duggan and Jackie Li
It might be thought that, for all their labor market woes, at least millennials now have health care and better health. How does this story fall short?

Policy
Sheldon Danziger
A comprehensive policy agenda that could help millennials … and other generations too.

Alexander’s Loan-Repayment Overhaul

Source: Andrew Kreighbaum, Inside Higher Ed, February 19, 2019

Proposal to automatically deduct loan payments as a share of borrowers’ paychecks promises big improvements but raises questions over some new complications, too.

Student advocates have for years complained about the complex set of options borrowers must navigate to repay their student loans. Student loan borrowers are faced with a dizzying nine repayment plans based on their income, in addition to a standard 10-year loan-repayment plan.

There’s a growing consensus that Congress should reduce those options to one income-based option on top of the standard plan.

Senator Lamar Alexander, the chairman of the Senate education committee, would go one step further, calling for loan payments to be automatically deducted from borrowers’ paychecks. ….

…. While the proposal to reduce the myriad repayment options for borrowers already has broad support among higher ed interest groups, getting buy-in for making student loan payments work more like payroll taxes is more uncertain.

Jessica Thompson, director of policy and planning at the Institute for College Access and Success, said streamlining the repayment plans available to borrowers is “an overdue change.” But she said paycheck withholding for loan payments is “in reality a lot more complicated than it sounds.” ….

How Colleges Spend Money

Source: American Council of Trustees and Alumni, 2019

Two out of three college students now graduate with an average of over $28,000 in student debt, and the price of tuition continues to rise at an unsustainable rate, faster even than health care. So how do colleges spend that money?

Built specifically for college trustees, policymakers, and other higher education decision-makers, this site is designed to equip the people who oversee colleges and universities with the tools to perform their own analysis of higher education spending trends, and create benchmarks in comparison with other institutions.

The 401(k) Student Loan Repayment Benefit Program

Source: John G. Kilgour, Compensation & Benefits Review, OnlineFirst, Published January 7, 2019
(subscription required)

From the abstract:
In recent years, student loan repayment programs have emerged as the hot new employee benefit. However, their growth has been restricted by their lack of favored tax status. On August 17, 2018, the Internal Revenue Service issued a private letter ruling approving a proposal to create such a program within a 401(k) plan. In a deft piece of reasoning, the private letter ruling provides relief from the so-called “contingent benefit prohibition.” This article examines student loan borrowing, the private letter ruling and its likely consequences and limitations.

Employer-Provided Student Loan Repayment Assistance Benefits

Source: John G. Kilgour, Compensation & Benefits Review, OnlineFirst, Published August 7, 2018
(subscription required)

From the abstract:
With 70% of recent hires being encumbered with student-loan debt, employers and employees have recently become interested in repayment assistance benefits. Since about 2015, 4% of employers and 8% of large employers have adopted such plans. An estimated 20% will have them by 2018. This article examines the background, growth and magnitude of federal and private student loans. It also examines those programs that have been adopted and gleans from them a number of questions that will help in the design and implementation of new programs by employers.

Work perks and benefits: what employees and candidates want

Source: Randstad, Workforce Insights June 19, 2018

From the press release:
….The takeaway? Almost all employees (94%) want their employers to ensure the benefits offered have a meaningful impact on their quality of life, like paying off student loan debt and offering more flexible work arrangements. But before employers attempt a benefits overhaul, they should perhaps focus on better education and communication about their existing benefits. Just under half (48%) of employees report knowing all the perks their employers offer, and only 40 percent say their employers help them understand the benefits that are available…..

Benefits can be an even stronger incentive than salary when considering a job offer, and an unattractive benefits package may drive candidates away.

– Sixty-six percent of workers agree that a strong benefits and perks package is the largest determining factor when considering job offers, and 61 percent would be willing to accept a lower salary if a company offered a great benefits package.
– Forty-two percent of employees say they are considering leaving their current jobs because their benefits packages are inadequate.
– Fifty-five percent have left jobs in the past because they found better benefits or perks elsewhere.

Both benefits and perks matter

When evaluating benefits, quality health insurance reigns supreme. But when it comes to perks, the survey findings indicate that workers want to maximize their time spent at work and appreciate conveniences that help them get the most out of their days.

– When considering a potential employers’ benefits (defined in the study as “standard forms of compensation paid by employers to employees over and above salary”), workers prioritize health insurance (75%), followed by retirement funds and/or pensions (21%).
– Highly rated perks (defined in the study as “workplace-related extras”), that workers want to see more of in the workplace are:
– early Friday releases (33%)
– flexibility and remote working (26%)
– onsite lifestyle amenities, like gyms and dry cleaning (23%)
– unlimited vacation time (22%)
– in-office meal options, like communal snacks or food courts (18%)
– onsite childcare (15%)

When it comes to benefits and perks, one size does not fit all

Age, income level and gender all play a role in the benefits that employees prioritize:

– Forty-one percent of respondents aged 18 to 24 said their current employers do not offer student loan repayment benefits, but wish they did.
– Workers aged 50+ named health insurance as the top benefit they wish their employers offered.
– Nearly a third (28%) of respondents who earn more than $150,000 annually say bonuses are one of the most important perks when considering new employment.
– More women than men want better parental leave policies (women: 22% vs. men: 14%) and onsite childcare (women: 15% vs. men: 6%).
– More men than women would like to see their employers offer life insurance (women: 15% vs. men: 23%).

Voluntary Benefits Now Essential, Not Fringe

Source: Stephen Miller, SHRM, April 13, 2018

Student loan help and financial planning aid are among offerings on the upswing.

Employers no longer consider voluntary benefits as simply add-ons but rather as “a way to address a host of employee needs, offer choice and allow employees to personalize their rewards,” said Lydia Jilek, director of voluntary benefits at consultancy Willis Towers Watson.

Voluntary benefits are supplemental to core health insurance and retirement savings plans and are typically employee-paid through salary-deferred contributions. They can be a cost-efficient way to provide additional coverage to employees, who can purchase these plans through their employer at a lower, group rate.

Newly released findings from Willis Towers Watson’s 2018 Emerging Trends: Voluntary Benefits and Services Survey of large employers show that:

– Only a handful of respondents (5 percent) say voluntary benefits will have little importance to the value they offer employees through their total rewards strategy. Five years ago, 41 percent of employers said voluntary benefits would have little importance.

– More than two-thirds of employers (69 percent) believe voluntary benefits will be a very or more-important component of their total rewards strategy in three to five years…..

Why Young People Are Joining Unions Again

Source: Hannah Finnie, Talk Poverty blog, April 19, 2018

…. Young people are at a tipping point. They are frustrated by a system whose cracks were etched into place by preceding generations, but have only fully metastasized for theirs. They experience suffocating levels of student debt alongside declining wages and income equality while watching companies monopolize entire industries, and sometimes even nationwide elections. Representation—actual representation—feels more like theory than reality.

People are, finally, beginning to take notice of young people’s activism to fix that system. However, many are mistaking the new wave of media coverage dedicated to young people’s political activism for young people’s newfound political activism. It’s not that young people were ever politically dormant; it’s just that their activism has existed in places where older generations aren’t used to looking: on college campuses, like the Know Your IX movement and tuition equity campaigns for undocumented students, and inside activist movements like #BlackLivesMatter and #ByeAnita and #Occupy.

And now, increasingly, unions. ….