Student debt effects more overwhelming and widespread, new research shows
SANTA CLARA, Calif., Sept. 10, 2019 /PRNewswire/ -- Chegg Inc (CHGG), the leading student-first learning platform, today called on leaders from business, government, and education to unite in tackling the U.S. student debt crisis. In a new policy proposal, Chegg urged tax policy changes and the creation of employer-sponsored student loan repayment programs to realign education as an affordable and relevant path to career success.
"Unsustainable levels of borrowing for education are taking a dramatic toll on the financial future and psychological well-being of American students and their families and creating a permanent debtor class for America's future workforce," said Dan Rosensweig, President and CEO of Chegg.
"The effects are particularly overwhelming given the rapid rising costs of education and slow wage growth. At the exact moment when we want young adults to be getting the skills needed to succeed and build their careers, we are making their financial situation as stressful as possible. This has created a generation of young people who are struggling to succeed under the heavy burden of loans," Rosensweig added.
New research from Chegg.org shows the adverse effects of student debt are more widespread than previously understood, including those thought to be better off. 48 percent of borrowers with household incomes over $75,000 a year reported having difficulty making payments. 66 percent of borrowers with household incomes over $75,000 a year are somewhat or very worried about their financial future.
"What we are seeing is that student debt is felt more deeply and widely than previously thought, especially for younger Americans," said Ajita Talwalker Menon, higher education expert and former Special Assistant to President Obama for higher education, one of the report's authors. "Student debt also impacts older Americans who face substantial financial pressures in mid-career even as they transition to retirement."
1 in 3 younger borrowers report having to forgo other monthly payments in order to make student loan payments. 83 percent of those who have forgone other monthly payments had skipped credit card payments, with 69 percent forgoing health expenses or insurance premiums. These actions can trigger harsh consequences threatening an individual's financial security, such as significant collections fees or damage to credit scores.
Student debt has also led borrowers to sacrifice medical check-ups, while some struggle with depression or anxiety due to the burden of student debt. Moreover, research shows that financial stress at work carries deep costs, including lower productivity, increased absences, turnover, and more healthcare claims.
The report, "Unlocking the American Dream: Student Debt Solutions for Our Future Workforce", contains a series of policy recommendations, including a call for employers to become more active in easing the debt repayment burden on their employees.
"Employers have the power to help alleviate pressures associated with student debt, while using loan repayment assistance to attract and retain top talent," said Rosensweig. "There are clear, effective solutions that can bring employers into the conversation, as well as provide immediate relief for millions. Now is the time for the private and public sector, as well as education systems themselves, to work together to address the issue," he added.
Only 8 percent of employers offer student loan repayment assistance (up from 4 percent in 2018). In June, Chegg announced a new program to help employees reduce their student loan debt by contributing as much as $6,000 annually, focused on entry-level through mid-level managers, in addition to an existing educational benefit of $5,250 for employees continuing education.
Money offered to employees for student debt is a taxable benefit, however. Those with student debt must earn a wage, pay taxes on it, and then use their after-tax dollars to pay off high-interest student debt back to the government.
In its report, Chegg set out short- and medium-term solutions to reduce stress on borrowers. It called on policymakers to use the tax code to encourage employer-sponsored loan repayment programs, in a similar way to existing programs to encourage retirement savings and continuing education. It also called for similar tax treatment for individuals without access to such programs, including workers in the freelance and gig economy. In addition, Chegg called for simplification of the student loan system to help borrowers, such as by managing repayment directly through the IRS and with income-orientated approaches.
For more information and to download the policy proposal on student debt go to:
Chegg puts students first. As the leading student-first connected learning platform, Chegg strives to improve the overall return on investment in education by helping students learn more in less time and at a lower cost. Chegg is a publicly held company based in Santa Clara, CA and trades on NYSE under the symbol CHGG. For more information, visit www.chegg.com.
Chegg.org is the impact, advocacy, and research arm of Chegg, Inc. addressing issues facing the modern student.
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