While the media loves to stereotype millennials as a spoiled, naive bunch, a new Indeed survey of the graduating class of 2016 paints a different picture of this much-maligned generation.*
Although 86% of the latest wave of millennials to enter the workforce report feeling “somewhat” or “very optimistic” that they will find a full-time job after graduating, we find this upbeat attitude is grounded in financial realism. An identical percentage of respondents has already started paying or plans to start paying off their student loans within the first year of graduating.
Considering that the class of 2016 will enter the workforce with the highest levels of debt ever—an average of $37,173 each—this is evidence of a high degree of fiscal responsibility. However, while some fresh grads will land high-paying jobs and quickly tackle their piece of the student debt crisis, others will take time to find their footing.
So just how easy will it be for new grads to pay off this debt—and what role, if any, should employers play in helping them?
What new graduates are searching for
According to the Federal Reserve Bank of New York, the median starting salary for a new graduate in 2015 was $43,000. Regardless of what side of this average income new graduates land on, the effects are far reaching. Setting aside sizable chunks of income to pay off loans hampers financial progress for engineering and humanities majors alike—especially when it comes to important milestones such as buying a first home or starting a family.
Meanwhile, Indeed data show that many of the jobs the graduating class of 2016 are searching for are usually not very well-paid. In fact, when we compare survey data on the cities new graduates tell us they want to live in with the most popular job searches by the class of 2016 in those cities, we find that the number one job search in nine out of ten cases is taken by “administrative assistant.”
It’s easy to understand why: Administrative professional roles are typically viewed as solid, entry-level jobs that enable people to get a foot in the door and gain valuable experience. For the same reasons, however, they are heavily oversubscribed and so salaries are less competitive. Even if a new graduate is fortunate enough to win an admin role, he or she may still struggle to pay off debt.
Only 3% of employers offer student loan assistance
This year’s graduating seniors are going into the workforce with their eyes wide open. One in four new graduates report that finding a job with student loan assistance is a “top priority.” And with good reason—taking advantage of employer contribution programs can help student debt holders shave off nearly three years of payments and save them an extra $4,100 in interest payments.
But while some companies have started offering student loan assistance in their benefit packages—including investment firms Fidelity, Natixis, and auditing and consulting firm PwC—they are in the minority. In fact, according to a recent study by the Society of Human Resource Management only 3% of employers say they offer help with loans.
Meanwhile, Indeed trends data show that use of the phrase “student loan assistance” is down 35% from last year as a share of all postings. Clearly, the class of 2016 is going to have a hard time finding the loan assistance it considers a high priority.
Student loan assistance represents an opportunity for employers
Here’s something else our survey revealed: 63% of this year’s graduating seniors want to be living on their own within the first year of graduating. For the majority of fresh grads, mom and dad’s basement just isn’t that appealing—but debt is something that can keep them there, preventing them from achieving the independence that is so important to so many.
Perhaps, then, the current focus on using “culture” as a means to attract millennials is missing something more fundamental: basic economics. Bean bag chairs, free food and ping-pong tables in an office are unlikely to have much impact on talent attraction or retention if the underlying economic concerns of new graduates are left unaddressed.
Since so few firms offer student loan assistance, this represents a clear opportunity for employers to stand out from the competition in the battle for talent. Those able to add it to their compensation packages and highlight it in their job postings will be undeniably attractive to the best and brightest of the class of 2016.