Helping millennials climb the mountain of student debt

Last year's graduates entered the workforce owing an average of more than $35,000 -- nearly twice as much as those who graduated 20 years ago. As an organization that hired 11,000 new graduates from our nation’s college campuses last fiscal year alone, we have an interest in helping recent graduates get off to a financially healthy start.

At PwC, we recently announced that we would provide $1,200 each year for up to six years toward the student loan debt of our professionals until they reach the level of manager. Over time, this benefit will help reduce their student loan principal and interest obligations by as much as $10,000, and shorten their loan payoff periods by up to three years. The firm will offer our plan through Gradifi, Inc.,  which created the student loan paydown plan both as a vehicle for companies to provide this new employee benefit and to provide a private sector solution to the growing student loan problem.

We know through listening to our employees that student loan debt impacts their daily lives and decisions. A recent article by Steven Rattner in the New York Times illustrated the trickle-down impact when students don’t get on the right foot financially. “Saddled with debt and thin paychecks,” he says, “Millennials are delaying purchasing cars and new homes, low mortgage rates notwithstanding. By June of this year, homeownership among Americans under 35 fell to 34.8 percent, down from a high of 43.6 percent in 2004.”  

Student loan debt -- driven by the rising cost of higher education -- is not only a pain point for millennials, and a concern for their parents, it’s also a broader societal issue.

For example, we also know that the mountain of debt is disproportionately steeper for certain groups: more than 80% of black college students take on student loan debt compared to 63% of whites. White students also obtain bachelor’s degrees at twice the rate of Blacks, and three times the rate of Latinos. The longer students are in school, the higher their debt climbs.

While we know that no organization can singlehandedly take on the issue of student debt, it’s an area where we believe we can and should make a difference. We all have a stake in helping young people build healthy financial futures because that in turn allows them to contribute to our communities and society more broadly.

As first in our industry, this is one area in which we hope others become “fast followers,” providing a valuable benefit to their employees. After all, each of us is competing for the best talent, and in most cases, the cost of hiring and onboarding a new employee is much higher than the cost of retaining one.

PwC's new benefit won’t solve the problem of student loan debt, but it provides some much needed financial relief to our future leaders during a pivotal time in their financial lives.