Millions of Dollars Are Lost Every Year to Employee Financial Stress
Is financial stress keeping your employees up at night? If your employees are highly educated, they probably have student loans. Lots of student loans. That debt, along with other money worries, could mean they’re suffering from financial stress—and that anxiety can cost your business big bucks.
ING U.S. Inc. (now Voya Financial Inc.) reported in early 2014 that employee financial stress costs businesses an average of $5,000 per employee, per year. The good news: it’s now easier than ever to help employees struggling with financial stress. Welcome to a new era of financial wellness programs and benefits that truly make a difference in employee performance and productivity.
One Man’s Experience With Financial Stress
Ben Wheelock is a supply chain consultant with EY, the multinational professional services firm known formerly as Ernst & Young. He got his MBA from Michigan State University, though he remains loyal to his undergraduate alma mater, the University of Michigan, when it comes to football.
The decision to attend grad school was a difficult one for Wheelock, because he knew he would just add to the loans he’d already taken out. “I got a decent job out of grad school,” Wheelock explains, “but by then I was tens of thousands of dollars in loan debt. I had federal loans, state loans and private loans.”
It wasn’t just the loan amounts that caused him anxiety. “I didn’t know which loans to focus on,” he says. “I have a smaller loan, so should I just pay that off to have it done with? Just thinking about that process was stressful.”
With payments due on different dates, Wheelock also frequently worried about missing them. He had been hired by EY, but wasn’t yet working when he started getting collection notices. “It made things very difficult from a business perspective,” he admits. “Bill collectors were telling me to pay up when I didn’t have the money to give them. I had to go through the deferment process, and that was always in the back of my mind. ”
Wheelock also moved to work with EY, which added to his stress. “I moved from tiny East Lansing to Chicago, which was stressful enough,” he says, “and I was starting at a very competitive workplace.” He focused on his new job, but it wasn’t easy. “When you start a new job, it’s like trying to drink from a fire hose. On top of that, I had to think about all these different loan payments.”
So his stress continued.
EY reimburses employees for travel expenses, but Wheelock still had to pay for those expenses up front. What’s more, there would be business outings or partner meetings that he couldn’t afford to miss—but couldn’t afford to make, either. “If a partner asks you out for dinner or drinks, the answer should be an automatic ‘yes,'” he explains. “But I couldn’t always say that. I had to check my bank balance first.” If he couldn’t afford a night out, he’d say he was busy or out of town. “From a professional standpoint,” notes Wheelock, “that made things pretty difficult when I was first starting out. ”
Worse still, that stress followed Wheelock home. “When I’m stressed, I don’t sleep,” he says. “Sleeping was really difficult when I started the job.” All of these factors made for a difficult career transition.
Financial Stress Costs Big Business Big Bucks
Although financial stress is less of a problem for Ben these days, it’s still a large problem for many others like him.
A recent Pricewaterhouse Coopers survey of 1,600 full-time American workers revealed that 81% of respondents with student loans suffer from financial stress. That’s nearly twice the 46% of respondents without student loans. Of those with student loan debt, 79% of Millennials and 66% of Gen Xers indicated that their loans significantly or moderately impact their ability to meet financial goals.
Money was the most commonly reported stress point according to the survey, at 48%. Workers also reported that financial stress impacts their health (28%), relationships at home (23%), productivity at work (17%), and job attendance (8%).
Money problems are clearly hurting employees and costing business millions. So what can be done to relieve some of the pressure
HR Departments to the Rescue
EY’s Human Resources department directed Wheelock to SoFi for help with his student loans. He was not only able to combine his existing loans into one, but was also able to lower the interest rate and save some serious cash over both the short and long-term.They also did him a solid by processing his signing bonus in a timely manner.
Other U.S. businesses are acting similarly, helping their employees cope with frustrations around debt. Financial wellness expert Amanda Clayman, who focuses on emotional and cognitive issues surrounding financial behavior, supports the efforts of HR departments. She believes that a big part of the stress battle is simply letting workers know they’re not alone.
One way companies are accomplishing this is by creating platforms that allow stressed employees to band together. “Having programs for people experiencing financial stress sends the message that what they’re feeling is normal,” says Clayman.
Support can take the form of giving employees the opportunity to become more engaged in finance. “Financial wellness programs work best when they incorporate financial literacy and support,” says Clayman. “If people want to save more, form an investing club, or get out of debt, employers can create opportunities for them to come together around those goals.”
A new but growing employer-provided benefit that helps employees stressed by student loan debt is student loan contribution. Details and exact figures vary from company to company, but the common denominator is that employers help their employees get ahead by offering regular contributions to their student loan payments.
So, while student loan debt is certainly a problem for both employees and their employers, the problem presents an opportunity: Even the smallest startup can compete with the largest blue-chip company by offering assistance to workers suffering from financial stress.
Breaking the Chains of Financial Stress
Financial stress is causing a great deal of anxiety in people with student debt, and it’s costing American businesses a lot of money. But companies are beginning to help employees at a time when they need it most. And, in doing so, they’re taking advantage of a silver lining to make recruitment more attractive to job seekers.
While his student loans are still on his mind, Wheelock is thankful that EY pointed him in the direction of SoFi. “It was a big help. SoFi has simplified the student loan process for me immensely. It’s eliminated so much stress that my loan debt is now, basically, an afterthought.”
Today, over 650 organizations partner with SoFi to tackle student debt and financial stress. Learn how your company can work with SoFi to enhance your financial wellness program. Your employees will thank you for it.