As students head back to school, a recent hot topic has been student loans. As these staggering stats show, the issue is reaching a crisis point:
- Over 40
million Americans have student loan debt, coming to a grand total of $1.2 trillion
- The average American is carrying $26,000 to $29,000 in student loans
- Only 37% are making payments on time and reducing their balances
The crushing burden of student debt is such an urgent problem that presidential
candidates are now compelled to share their plans to address it. Democratic presidential contender Bernie Sanders has proposed a debt-free college plan, while his rival Hillary Clinton has countered
with a $350 billion plan to significantly reduce student debt. On the Republican side, presidential hopeful Scott Walker has been touting his accomplishment of freezing tuition at the University of
Wisconsin for four years.
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This issue poses a growing challenge for the business world. It is causing young adults to delay moving out, getting married, starting families and
launching their own businesses. The Pew Research Center estimates that about 26% of millennials still live with their parents. All of these have
tremendous economic repercussions. Companies need to find a meaningful way of engaging with students who are saddled with debt, in a way that is beneficial for both brands and their
customers.
Here are three ideas for how brands can more effectively connect with teens and young adults and assuage their concerns about this issue.
1.
Provide scholarship opportunities.
To avoid taking out loans, many students are seeking creative ways of financing their education. There’s an opportunity for
companies to create goodwill with these customers by offering scholarships as part of a corporate social responsibility initiative. In fact, scholarships are a great way of engaging entrepreneurial
teens in co-creation and ideation. Imagine if, say, H&M offered a scholarship to the fashion student who designed the best new jeans for back-to-school season. A company like Ford could offer a
scholarship to the engineering student with the best idea on how to improve fuel efficiency. These types of projects tap into the creativity of young people while also helping support their
education.
Offering grants to employees or their children is also a great idea. For example, Starbucks, a company that is frequently a leader in HR practices, provides college
education to every benefits-eligible employee via a partnership with Arizona State University. Companies that are thinking of launching a similar program can maximize the initiative’s success by
engaging with employees to better understand their needs and opinions.
2. Provide flexible work opportunities for college students.
If you have
high school or college students on your staff, be mindful that these employees often need flexibility in their schedules. Millennial and Gen Z employees can provide critical insight on consumer
lifestyle trends, so it’s a good idea to ensure they’re happy with their work arrangements.
Young employees appreciate a flexible schedule, and providing a work
environment that caters to students creates life-long relationships with these young customers. This is something I know firsthand: I started working in media thanks to a paid college internship, and
I’ve developed a life-long loyalty to that company because of the way they treated me. They gave me a paid job with flexible hours at 19, taught me all about media, promoted me onto staff at the
start of my senior year, and gave me a springboard to the rest of my career. To this day, I watch all their programming, evangelize it to others, and support them every way I can in our professional
collaborations.
3. Market and communicate more thoughtfully.
The student loan crisis—coupled with the weak job market of the last six
years—has greatly changed consumer lifestyles. As I mentioned earlier, young people are delaying moving out of their parents’ house, getting married and having kids. For many of these
people, home ownership might not ever be an attainable life milestone if student debt makes it difficult for them to save money.
Even upscale customers (those between the ages of 18
to 34 who are making six-figure incomes, often with no mortgages or kids to support) might not have as much disposable income if they’re carrying large student debt loads.
Given the evolving lifestyle of today’s youth, your marketing efforts need to reflect accurate life stages, correct price points and sensitivity to the fact that many are shackled to
an incredible amount of debt. Your market research program needs to be able to thoroughly investigate these changes. You need insight not just on your product or category; make sure that you
understand the whole picture as well and what your young customers are going through. Engage with millennials and Gen Z in a two-way conversation frequently to make sure that your marketing messages
reflect the reality of their lives.
Conclusion
The issue of increasing student debt requires complex socioeconomic solutions that are largely out of
the hands of businesses. But by providing students with the opportunity to work, earn scholarships, co-create and share the details of their life-stages and life-needs, companies can make
today’s “starving student” tomorrow’s best customer and executive.