Many UW System graduates must start paying back their student loans six months after leaving school. The average grad here faces about $30,000 worth of student debt. An effort is underway to persuade employers to adopt a new benefit for workers: help pay down student loans.
Tim DeMello is CEO and founder of a Boston startup by the name of Gradifi.
“I mean you have some people who are spending as much as $700, $800 a month on student loan payments, so anything that will sort of help with that, they’re very interested in,” said DeMello.
What Gradifi has developed is a program that lets employers lend a hand.
“The money goes from the employer to our platform directly to the student loan account. So the employee just sort of opens up their Great Lakes or Navient loan statement and they see money coming in as contribution from their employer,” said DeMello.
The cost ends up being $3 to $5 a month per employee.
Gradifi made headlines recently when a big client came on board—Pricewaterhouse Coopers, one of America’s largest accounting firms.
In Wisconsin, one company has signed-up for the plan—Powertex Group, a graphic design company located in Eau Claire. Around 20 Powertex employees are set up for the program and will start feeling the effects come June. Gray Powers, vice president of sales says, after hearing how much his employees were paying monthly, he was shocked and wanted to help.
“As education costs become more and more expensive, it’s going to be up to employers to figure out how to help these folks manage that transition from being a student to their career, and help them continue to move in a pathway towards fiscal responsibility,” said Powers.
While the concept could be alluring for freshly graduated students, Powers hopes they don’t push aside saving for retirement.
“I think we all have a tendency to look at what’s in front of our face, and obviously if you’re a recent graduating student and you got a bunch of school loans there’s certainly a tendency to feel like you should probably work on getting your student loans under control before buying a house or before any other sort of trigger point in life. And obviously retirement is a part of that process,” said Powers.
The idea of employers helping with loans sparks hope. Yet, unless it becomes a trend...
“It’s a scary feeling to know that I have to pay that money back,” said UWM student Jachin Moore.
... the sheer amount graduates owe will still be quite the obstacle.
“It just gives me anxiety thinking about how to even approach it,” said fellow student Kathleen Hurley.