Many Americans are clamoring for student debt relief, but according to a recent study, most don’t understand the programs already available to them to ease the burden of educational loans.
What’s more, they’re not receiving adequate information about debt relief from their employers, which may be an opportunity for advisors and retirement plan sponsors, according to an AIG Retirement Services survey of 664 nonprofit and public service employees.
Most of the public service employees in the survey, 70%, expressed minimal understanding of programs like Public Student Loan Forgiveness (PSLF), and only 12% of those carrying student debt received information about the program from their employer.
PSLF is available to millions of public sector and nonprofit workers, according to ASG, including health-care workers, first responders and teachers
AIG claims that one-in-six Americans currently carry federal student loan debt, a significant burden on their financial health, as 78% of the survey respondents named student debt as a top financial stressor. It was the top financial worry among the respondents, named by 66%, 22 percentage points ahead of the next highest stressor, credit card debt, named by 44%.
When asked about the PSLF program, 84% found it appealing, and one-in-three saw it as their only hope of paying off student debt in a reasonable amount of time. However, the respondents said confusion about the program was their top barrier to achieving loan forgiveness through the PSLF program, and one third of the respondents expressed confusion.
Respondents also overwhelmingly said that funds saved from forgiven student loan debt would be diverted to other financial priorities: paying off other debt, named by 51%; retirement savings, 47%; and emergency savings, 43%.
AIG argues that the PSLF is a chance for employers to help improve the financial wellness of their workers. To that end, AIG Retirement Services partnered with Savi, a social impact fintech, to launch an online tool to help simplify the loan forgiveness process, assisting plan sponsors and participants with determining qualification for forgiveness, calculating savings, enrolling and maintaining eligibility.
The study was conducted by Dynata and was fielded in October and November among 664 employees aged 21 to 67 who had student loans for which they made payments themselves and worked a a minimum of 30 hours each week in the government, heath-care and nonprofit fields.