By: Laura Walton AFC®
Yes, they’re a burden. I talk to very few young adults who don’t carry some student loan debt. But, as with every personal finance decision, the student loan debt experience is very different from one person to the next…and there are some interesting new options available.
Maybe you’ve heard “SoFi at Work” advertised? I have. Sofi at Work is a benefit program for companies to help their employees reduce their student loan burden and build financial wellness.
At first I assumed you would have to refinance your debt with Sofi to come under the program – not so. Apparently Sofi has teamed up with more than 600 companies including top-ranked tech firms, law firms and financial institutions.
Sofi administers regular contributions directly from the company to their employees’ existing federal or private student loans, reducing loan balances and saving interest expense.
What’s in it for Sofi besides an administrative fee? The employer makes SoFi Student Loan Refinancing available to employees at no cost to help them save money and pay down their loans faster, with incentives like educational resources and a welcome bonus. (Remember: When refinancing a government loan to a private loan, you lose borrower friendly repayment programs, etc.)
Mike Cagney, CEO, Chairman & Co-Founder at SoFi, believes that “when it comes to employee benefits, student loan help is the next 401k.” Makes sense. Student loan debt is a priority concern for millennials, now the largest percentage of the workforce according to Pew Research.
And there are other options. A friend of a friend applied to the National Health Service Corps program which pays off up to $50,000 of student loans for two years of full time work in underserved communities. More than $50,000 can be covered by renewing your contract. This individual found what turned out to be a rewarding position in Prescott. Without the help of this program, she would have been obligated to payments for another 13 years.
And I recently worked with an individual who used her credit card to pay a chunk of her student loan balance and then transferred the balance of that card to a 0% credit card. Who knew you could use a credit card? But, lenders have wised up – they’ve closed that loophole.
Which brings to mind a recent Wall Street Journal article that reported on which colleges and universities will allow tuition to be paid with a credit card. They are few and far between and many charge a processing fee (3%) but think of the bonus points!
My last point is that I also talk to many young adults who regret the amount of loans they drew down. They admit to using a portion of the money to fund lifestyle – spring break vacation, a nicer apartment, even a round of drinks for the bar with each renewal. Hindsight is 20-20 and payments go on for a good, long time – borrow responsibly!