Why Companies Should Help Tackle Student Debt

In this series, students and industry experts share stories and perspectives from inside the student debt crisis. Share yours here using #StudentDebt.

Diversity is a key to better performance, innovation and growth.  One obstacle to developing a diverse workforce in the US is the growing burden of student debt.  The success of American business depends on the pipeline of student talent in our society, yet students are being crushed by debt, and minority and low-income students are paying the heaviest price.  The private sector should help lead the way in addressing this fundamental problem in our society.

According to Student Loan Hero, about 43 million borrowers owe more than $1.3 trillion in student loan debt, with the average 2016 college graduate owing more than $37,000.

These and related statistics confront those recruiting graduates with two unavoidable facts.  First, the cost of education and the ensuing debt burden is prohibitive for many.  That means we’re not seeing people develop their talent and potential to contribute to our society.

Second, student debt is an obstacle to student diversity.  Minority and low-income students have fewer financial resources, borrow more, and drop out at higher rates.  And, they are more likely to cite finances as the reason for leaving school.  Moreover, 60 percent of white students graduate from college within six years while only 40 percent of black students and 51 percent of Hispanics do so.  Inevitably, diverse students graduate with more debt than their white counterparts.

When we looked at the myriad of issues, we found that far too many organizations were waiting on the sidelines for either schools to reduce tuition costs or the government to find ways to make college more affordable.  While both of these are necessary steps, progress is slow.  The private sector has a leadership role to play, and it’s time for us as business leaders....to lead.  At PwC, we’re working to be part of the solution and we hope other businesses will join us.

The employee benefit we launched last September will pay $1,200 a year toward the student debt of our associates and senior associates (people with roughly one to six years of experience).  Over time, this benefit can help reduce student loan principal and interest obligations by as much as $10,000 per employee and can shorten payoff periods by up to three years.  We are making this benefit available to 45% of our workforce in the U.S. – about 22,000 employees.

As we continue to study the problem and look for additional ways to attack student debt, we hope other companies take a seat at the table and join us.  No doubt others will identify different and equally valuable ways to address this problem.  We certainly hope so. Our purpose is to build trust and solve important problems.  That’s what our student debt initiative is all about.

Learn more about our student loan paydown program here and here.