Nothing could be better than working for a top company that helps you pay off your student loans, right? Well, a bill was introduced by legislators on 2/1/2017 that is trying to make this a reality. This bill was introduced as the Employer Participation in Student Loan Assistance Act. In addition to the introduction of this Act, the Internal Revenue Service (IRS) also released a private letter ruling. What could these events mean for companies and employees who carry student loan debt?
Employer Participation in Student Loan Assistance ActFirst, this bill would amend the tax code by giving tax breaks to employers that provide educational assistance to employees. Educational assistance can be in the form of contributions to student loans through either a payment to the employee or lender. Specifically, this act would allow employers to offer a tax-free student loan benefit in addition to a salary to its employees.
IRS Private Letter RulingRecently, there was a private letter ruling released by the Internal Revenue Service (IRS). If you want to review the contents of the private letter ruling, it can be found here. The ruling allows employers to use 401(k) plans to help employees pay down their student loan debt. It is done by taking the employer 401(k) match to pay down student loans. Any employee who is eligible for a 401(k) plan would be eligible for this plan. The ruling states that the plan is a voluntary program that employees must elect to enroll. Employees who choose to participate in this plan would be eligible for non-elective contributions made by the employer to their student loan debt. These contributions would be equal to what would have been contributed to a 401(k) plan had the employee opted out of the program.
What Does Student Loan Debt Assistance Mean for Employers?When managing a business, it is imperative that you stay on top of recent news. Part of staying on top of things includes understanding what challenges your employees face. Both these aspects of operating a business and understanding the needs of your employees, however, can fall hand in hand. When it comes to student loan debt assistance, it can be a huge positive for any business. Not only does student loan debt assistance help employees achieve their financial goals, but it also brings many benefits to a firm. Offering a student loan debt assistance program does not typically cost a company extra. The employer contributions to student loans are what a company would have typically made as a 401(k) contribution. Therefore the costs of providing 401(k) contributions and student loan debt assistance are equal. Another positive that comes from offering a program like this is that it helps with finding top talent, recruiting, and retaining all-stars. With older generations of employees retiring in record numbers and the workforce shifting to younger millennials, it’s important to take some time to examine the benefits of providing student loan debt assistance. As many millennials have student loans and report that paying them down is a priority over saving for retirement, companies should begin thinking about reevaluating their benefits package to attract millennials. Finding ways to help this generation pay off student loans could be a big boost to a company’s recruiting strategy. Offering student loan payment assistance could put a company on the cutting edge as far as millennial professionals are concerned. benefits report by OneDigital, nearly 80 percent of employees surveyed by American Student Assistance felt that an employer-sponsored student loan repayment benefit would be a deciding factor in accepting a job. This could be a huge differentiator for an employer aiming to recruit the best employees. The American Student Assistance survey also showed that 86 percent of employees would feel compelled to stay with an employer for at least five years in exchange for student loan repayment assistance. Considering how much companies spend on turnover (recruiting, training, and onboarding new employees), this could mean huge potential savings on talent management costs for employers.
What Does Student Loan Debt Assistance Mean for Employees?Some companies already offer student loan assistance, but these funds are usually taxed. This type of assistance isn’t as attractive as pre-tax funds because taxes reduce the impact of payments on student loans. Tax-free repayment funds from an employer could be more effective in helping graduates pay down their student loans faster. Employees would avoid incurring taxes associated with this type of assistance. Many Millennials also face the question of, “Should I save for retirement or pay down debt first?” Student loan debt assistance could be a solution that addresses both concerns. Young employees would have the ability to make substantial payments towards their student loan debt. With these large payments, they will be able to cut down their repayment time. That means young employees would have the ability to start saving for retirement earlier in their career instead of trying to pay down their debt.
Looking to the Future of Employment and Student Loan DebtWith the recent Employer Participation in Student Loan Assistance Act and IRS Private Letter Ruling, it seems student loan debt has become a problem for employees. Since employees are having difficulties with paying down student loan debt, it is time for employers to take action. Not only will employers benefit from offering student loan debt assistance programs, but it will most likely be at little or no cost to them. If this act becomes a law, experts think that companies will immediately begin to rethink their benefits package and consider student loan debt assistance as a way to attract the best employees. Though it may not be easy for millennials to land a position with one of these companies, they will certainly have another factor to decide in student loan debt assistance when choosing their employer. Interested in starting a conversation regarding your student loans? Give us a call: 1-844-601-ELFI.
Unless you’re hardcore off the grid and don’t need a credit score or credit history (not advised), you’re going to need bank accounts and at least one credit card. If you need them anyway, why not find the accounts that pay you back? There are tons of promotions for cards and accounts that will give you perks for signing up. It’s up to you to determine what account fits your needs, but these are the main types of offers we’ve seen.
Cards with Cash BackSome people swear by cards that give them cash back. Cashback rewards tend to work best for people who use their credit card for all or most purchases and then pay it off in full each month. A quick tip is to pay the balance off before the interest accrues each month. If you choose not to pay off the balance each month you could actually be spending that money. Basically, what you pay in interest is going to reduce or even negate your reward. The average individual will not pay off their card’s balance each month this is how it makes sense for the credit card company to offer the reward. If you’re smart about it and don’t charge more than you can pay off each month, you’ll reap the reward. There are multiple options for receiving cash back rewards. How you cash back will be applied will be dependent on what your credit card provider allows. Some cards will allow you to redeem your cash back for gift cards, paper checks, direct deposits, or even putting the cash back you earned back to your credit card balance. If you believe that this type of card is best for you, understand the redemption threshold. Cash back credit cards often have a minimum redemption threshold. A minimum redemption is the amount of rewards that you must achieve before cashing in your cash back rewards. These redemption minimums can often be associated with reward credit cards as well.
Cards with RewardsIf rewards like frequent flier miles or points you can redeem for travel expenses are more your speed, check out cards with other types of rewards. Look at the conversion from dollars to points to what your points can be redeemed for. If you have to spend $10,000 for a $100 gift card, then that probably isn’t enough of a reward for you to care. But if you fly often for work or find a card that has good travel rewards and you can pay it off each month, this might be a nice way to add to your travel nest egg or get a good discount on a few trips each year. How the rewards are calculated will be determined based on the credit card that you select and get approved for. Some reward cards will provide the same rewards rate per purchase regardless of balance. Another type is similar to a tiered cash-back credit card. Each purchase you make will fall into a category. Some categories offer a larger return than other categories. A quick word of caution before signing up for a card like this is to know the type of borrower you are. If you typically do not pay your credit cards on time, have a balance, or budgeting is not your strong suit this is probably not the right credit card for you.
Cash Rewards on Bank AccountsBank accounts often offer cash rewards for signing on or setting up an account. You may often times see at your local community bank a large sign in the window with an amount on it for new customers who open up an account. This sign-on bonus is by far the most common type of cash back for a bank account. When considering opening up an account to get the sign-on bonus there may be conditions you have to meet. The small print and terms are so important when opening up any type of account. When opening an account, you have to make a pretty substantial initial deposit, and you might have to maintain it for a period of time as well in order to keep the sign-on bonus. You don’t want to count on a reward and then find out that it requires you to deposit $20,000 if you don’t have that much money. Conditions can include a number of direct deposits or purchases you have to make within a certain period to qualify. This type of offer is fairly common when looking into high-yield checking or savings accounts. You’ll typically be required to have a specified number of transactions per month and have to have a direct deposit. If you’ve read all the terms and small print and feel the account is the right choice you should move forward.
Other Things to Consider
Know the InterestIf you are looking at a card for the rewards and it has a much higher interest rate than others, this should weigh into your decision. Even if you plan to pay the card off each month, you don’t want to end up using it in an emergency and struggle to make payments with interest later. If you already have other credit cards, have a plan for which card should be used where and how you’re going to pay them.
Look at Annual FeesSome reward and cash-back cards have a pretty hefty annual fee. Don’t sign up for a card until you know what the annual fee is. Make sure if there is a fee, that it makes sense for how you intend to use the card. If saving money is the name of the game for you, look for a card with no annual fee.
Know the RequirementsRequirements for different types of accounts vary wildly. There could be a minimum deposit, amount, number of purchases, or balance. Many companies utilize different types of requirements that you may have to meet to get rewarded. Keep an eye out for those requirements and see if you qualify. If it doesn’t match your situation, don’t do it.
Check the Terms and ConditionsAlways read the fine print and make sure you understand it. This rule should be applied t anything and everything. Make sure you’re reading any documentation fully and that you understand. Reading the terms and conditions will help to prevent any surprises. If there’s something you’re not sure of, read further or talk to customer service for more information. You always want to be sure that you know what you’re getting into before you sign up so that you don’t end up in a bad situation.
As more millennials are stepping into experienced job roles and making more money than we were a few years ago, cosigner release is becoming a popular topic. You may have seen a letter in the mail from your student loan servicer or heard from others that they were able to release a parent or relative from cosigner duties. But what does this mean?
What are the responsibilities of a cosigner?A common misconception about cosigning a loan is that you’ll be the sole responsible party for the loan. Being a cosigner means that you and the student taking out the student loan are jointly responsible for paying the balance of the loan. In the event that the borrower is not able to pay, the cosigner becomes the focus of repayment efforts by the loan holder or servicer. If the borrower is unable to make payments because of a disability, the loans might be forgiven. There are some special cases like this where the cosigner won’t have to pay, but in general, being a cosigner is a long-term commitment that can’t be eliminated except through payoff, release, or extenuating circumstances.
How does cosigning affect credit?Before asking a friend or family member to take on the responsibilities of a cosigner it’s important to understand how that will affect their credit. Since a cosigner and borrower share the responsibility of a loan, it appears on both of their credit reports. If loan payments are made on time and the borrower is in good standing, then the cosigner will also benefit from the good credit. If the loan has late payments or does into delinquency, this will negatively affect the cosigner’s credit. In addition to affecting the credit score of the cosigner, they may become limited as to the amount of credit available to them. Before asking someone to be a cosigner verify they are not looking to have any large amounts of credit like a mortgage, credit card, or car loan.
When do I not need a cosigner?Students do not need cosigners to qualify for Federal loans like a Stafford or Direct Loan, but it can improve the chances of being approved. It’s very common for students who apply for private loans to add a cosigner to get the amount that they need and a typically qualify for a much better rate than they could get on their own.
What is cosigner release?Cosigner release is when the person who cosigned on a loan for you is taken off of the agreement and no longer considered partially responsible for the loan. This makes the borrower solely responsible for the remaining amount of the loan. Some student loan refinancing lenders don’t offer cosigner release. When student loans are granted, they are provided based on your cosigner’s credit and the borrower’s credit. In traditional cosigner releases the terms of the loan would remain the same as when the borrower took out the loan with the cosigner on it. The only difference with the cosigner release is the cosigner is being removed. When they allow you to release your cosigner depends on the company, if it is offered at all. Most companies that offer cosigner release allow you to do so, once you’ve made two consecutive years of payments on time. Others may have longer terms for on-time payments before they allow you to apply for release. If you haven’t been making the full payment, that might eliminate your eligibility to release your cosigner. The release also has to be initiated by the borrower and can’t be requested through the servicer by the cosigner. Not all companies offer cosigner releases. As we mentioned earlier some since loans are originated to include that cosigner, just removing them can be tough. That’s why many companies don’t offer cosigner releases but don’t stress. If you choose to refinance a loan with a cosigner but then decide You’d like to remove that cosigner, there are other options available to you.
Will refinancing my student loan release my cosigner?People often ask, "What if I just refinance my loan without the cosigner on it. Is it the same as a cosigner release?" Refinancing student loans is not the same thing as getting a cosigner release. Before we go into greater detail it’s important to understand that very few loans are refinanced with a cosigner. If you are in a position to refinance and qualify, then you don’t need a cosigner to make the new loan possible. There are some exceptions, but during refinancing, you’d be able to check with the servicer to see what terms you could get on your own and then go from there. Most companies that refinance student loan debt will allow you to add a cosigner if you do not qualify on your own, but the cosigner will need to submit some information. If you choose to set up a new refinanced loan without the cosigner, it releases them from the obligation of the former loan. You may be asking “Is there another way that a cosigner can be removed from a loan without utilizing a cosigner release?” well the answer is yes. Aside from utilizing a cosigner release or refinancing the loan without the cosigner, the borrower or cosigner can pay off the debt. Once the debt is paid off both parties are no longer responsible for the debt. Before you ask someone to cosign on a loan, consider these things and be sure that they are okay with the responsibility. Make sure that you as a borrower have an understanding and a plan for paying back that debt. If you don’t think that you can pay back the debt or are uncertain of how you will pay off the debt you should not involve a cosigner. Most students ask their parents to cosign, but frequently have another relative help them by cosigning to get a loan. Know that cosigner release might be possible later, but don’t count on it, and check with the financial institution that holds your loans about cosigner release. You might be able to let mom or dad off the hook by refinancing or paying the debt down in full.
There are so many terms that borrower’s encounter in the student loan application process, most borrowers may not be exactly sure what each means. If you’re getting ready to apply or just want to know what the documents are talking about, here’s our glossary of common student loan terms that you should know.
Adjusted Gross Income (AGI) and Gross IncomeGross income is the total income you earn in a year before deductions for federal or state taxes, credits, and so on. Adjusted gross income is the income you earn in a year which is eligible to be taxed after accounting for deductions. AGI is usually lower than your gross income and is what many institutions use to determine if you can get perks like loan tax benefits or financial aid, grants, etc. The easiest place to find these are on your official tax return.
Adverse Action LetterWhen you apply for credit, insurance, a loan, or sometimes even employment, and are denied due to something negative on your credit report, the organization inquiring might be required to send you one of these. It explains why you were turned down and it’s important because it gives you a reason to see if something is wrong on your credit report.
AmortizationThis term describes how the principal is paid over the course of a loan. Most student loans are fully amortized, meaning that if all payments are made as scheduled over the life of the loan the principal balance will be fully repaid at the maturity date. Other types of loans, including some types of mortgage loans, have a feature known as a balloon payment. With a balloon payment, regularly scheduled payments do not fully repay the principal amount borrowed, so when the loan matures the final payment contains a larger, or balloon, payment of all remaining principal.
Annual Loan LimitThis is the maximum loan amount you can borrow for an academic year. Loan limits can vary by facts like grade level and loan type.
Award LetterIf you received financial aid, expect to see an award letter that explains the different types of aid for which you are eligible. The document will also include information about your loans, grants, or scholarships, and you’ll see a new one each year that you’re in school.
BorrowerThe person who is responsible for paying back a student loan. You may not be the only one responsible, like if you signed with a cosigner, but the loan is for you and your academic fees and tuition. You’re the borrower.
Capitalized InterestWhen unpaid interest gets added to the principal balance (increasing your overall balance and future interest), this is called capitalization. This is why it’s important to pay interest whenever possible. Capitalization might happen at the end of a grace period or deferment, or after forbearance, depending on whether it’s a federal or private loan. When a loan is consolidated or if it enters default, capitalization may occur.
CosignerIf needed, borrowers can add a second person who shares responsibility for a student loan. This second person co-signs the loan and becomes partially responsible for repayment in the event that the primary borrower is not able to pay.
Consolidation LoanConsolidation is when a new loan replaces your current student loans. People might do this to make payments easier to manage or to reduce the amount you owe each month or in total. There are lots of things to know about consolidation.
Default/DelinquentA loan is considered delinquent when a scheduled payment is not made in a timely manner. Delinquency can result in the imposition of late charges, collection calls or letters, and negative information being placed on a credit report. Default is when the lender determines that the borrower has failed to honor the terms of the loan agreement in such a way that the lender is entitled to declare the entire loan balance due and payable, even if the loan has not yet reached its maturity date. Serious delinquency is very often the reason for a loan being declared in default, but loan agreements typically provide that certain other events can trigger a default. Before entering into a loan agreement, always read the loan agreement carefully and understand what can constitute a default under that loan.
DefermentStudents can usually postpone loan repayment if they meet certain criteria. This might be a pre-set time limit or can be when someone is in school and not able to make payments. Unsubsidized loans accrue interest while being deferred, but subsidized loans do not accrue interest while in deferment.
DisbursementThis is when your school receives funds like financial aid money or student loan funds. The institution then applies it to your bill for tuition and school-related fees. If you consolidate, the disbursement happens when money is sent to pay off your old loans.
DischargeWhen some or all of your student loan debt is canceled, this is called discharge.
Entrance/Exit Interview or CounselingSchools provide entrance or exit counseling to help students understand important financing topics like how to repay loans and stay in good standing with student loans. This can happen during enrollment as an entrance to the process, and after graduation as part of leaving the school system.
Expected Family Contribution (EFC)This amount is an estimate based on how much money you, your spouse, and/or family can contribute to your tuition for the academic year. It’s calculated with information provided on your FAFSA and helps determine your financial need. Financial need is calculated as the cost of attendance minus your EFC. This determines your eligibility for aid including Stafford loans, Perkins loans, scholarships, and grants.
Fixed or Variable Interest RateIf an interest rate cannot change over time, it is fixed. A variable interest rate can change over the life of the loan. Variable rates can move up or down based upon changes to an identified index, such a prime rate, a particular U.S. Treasury note, or LIBOR. LIBOR stands for the London Interbank Offered Rate, and is an index commonly used with student loans. Some variable rate loans may have a “cap” and/or a “floor.” A cap is the maximum rate that can be applied to the loan, regardless of changes to the index. A floor is just the opposite – the minimum rate for the loan regardless of changes to the index.
ForbearanceForbearance is when you can postpone or reduce student loan payments, but interest continues to accrue and increase the total amount you owe.
Free Application for Federal Student Aid (FAFSA)FAFSA is the application a student must complete to apply for any type of federal student aid including loans, grants, or scholarships.
Full-Time/Part-Time EnrollmentWhether you are enrolled or not, and your status as part-time or full-time can affect different aspects of student loan financing and repayment. Part-time is usually six credit hours and full-time is twelve, but this can vary.
In-School DefermentWhile in actively enrolled in school, you might be able to postpone your federal or private student loan payments until you graduate or drop below half time.
Loan ForgivenessWhen you qualify for certain programs, you may be able to have the final balance of your loans forgiven after a certain period of time. There are specific criteria for eligibility and usually a detailed application process.
Master Promissory Note (MPN)This document states the terms of repayment for your student loans and is the official document proving your commitment to repay the money you borrowed with interest. To receive federal loans, all borrowers must sign an MPN.
Principal BalanceThe principal balance is the amount of money borrowed under the loan that you currently owe. It doesn’t include interest or fees that are either unpaid or yet to accrue.
Repayment PeriodThis amount of time is what you have to repay your student loans. Standard for Stafford loans is ten years, but this can be extended with reduced repayment plans. The longer you take to pay your loans, usually, the more you end up paying in interest. A repayment plan is the formal agreement you have with a servicer that details how you plan to repay your loans each month.
Repayment TermsThese terms represent all of your rights and responsibilities for the student loan, including what you’ll pay for monthly payments. Lenders are required to disclose repayment terms to you before you can commit to borrowing a loan.
Right to CancelOnce an approved application has been accepted by the borrower, the federal Truth in Lending Act requires the lender to provide a Final Truth in Lending disclosure statement. This final disclosure statement includes a three business day right to cancel, during which time the borrower can change their mind and cancel the loan. To protect borrowers, the lender cannot disburse the loan proceeds until the right to cancel period has expired.
ServicerThe loan servicer handles your student loan billing like collecting payments and offering customer service between you and the lender.
Student Aid Report (SAR)The SAR is a detailed list of all of the financial and personal information you submitted for your FAFSA, including financial info for your family. Your school receives a copy of this and you should receive one as well.
Subsidized and Unsubsidized LoansWhile in school and during your grace period, the government pays the interest on your subsidized loans so you don’t have to. Federal loans that are not based on financial need are unsubsidized, meaning you’re responsible for paying the interest that accrues.
The most wonderful time of year can often be the most confusing for employers looking to bring holiday cheer to the office. It’s usually a busy time for everyone and sometimes it can be a lot of work for not a lot of reward, but no need to bah-humbug. Here are some ideas, including the ever difficult to answer gifts for employees question.
Employee giftsGifts for employees change with the times because the economy is always changing and people’s preferences for the gifts they want to receive change. Some might think, a gift is a gift, when in fact nothing could be further than the truth. There are parameters. Some gifts may even have the opposite reaction of what you intended. We’ve all had that “gift” from a relative or someone that didn’t seem like a gift at all. It may feel like more like a joke, or worse, a burden that you feel you need to outwardly appreciate, but you really don’t. First off, a gift is a gift. If you’re basing it on performance it’s a performance bonus. If there are no strings attached, it’s a gift. That’s not to say that all gifts must be equal, but they should come from a good place. Forget about giving out company branded SWAG, that always ranks as one of the most hated gifts. What do most employees want? Ask them and they’ll tell you they want cash. They may appreciate the gesture of fruit, gift cards, or motivational books. When it comes down to it when you ask if they would have rather had cash the answer is usually, yes. The great thing about cash is it’s easy. The problem with cash is it’s impersonal. It’s not always fun to give and sometimes easy to forget when it’s from your employer. Education Loan Finance for Business can help out here in a unique way because you can give them something that has the power of cash, with added sentiment and thoughtfulness. You can help pay some of their student loans for the month. By providing a yearly contribution to student loan debt it is the same as giving cash, but it tells employees you understand. It shows that you understand the financial obligations they have and you want them to be in a more financially secure place. They can use the extra money they don’t have to pay loans with, on their holiday gifts, or they can pay down their loans even faster. It’s a win-win. Not every employee will have student loans obviously, but it’s a great option for those that do. For the rest? What employees seem to love most is a choice. That may seem a little impersonal, but really it’s not. Say you offer, cash, a gift card to a nice restaurant or an extra day off next year. Employees who get to choose what they want will be happy because they were involved in the process. Happy employees mean fewer complaints and that can help make the holidays a little happier.
Educational LunchAround the holidays many people become stressed about finances due to gift-giving and popular shopping days. Something you can do as an employer to ease stress for your employees is to set up a financial education lunch. This type of lunch would be great before the holidays to share some budgeting tips and ideas. Have a local banker, partner, or client come in and share their top tips for the holidays. Cater the lunch and allow employees to ask as many questions as they’d like during the sessions. If you want to make it fun try giving away some surprise gifts for those who attend.
Remote Working DaysAs the holidays draw near, the workload of employees will continue to get bigger. Consider offering your employees some remote days around the holidays. This will allow employees to work from home saving time on commuting and they can get more of their own personal chores done too. If you cannot permit employees to work from home try offering flexible working hours. Any additional flexibility that can be offered during the holidays will have a large impact on employees.
Let your employees share in the giving or not.Whether it’s a secret Santa, white elephant, or a grab-bag, most offices have some sort of gift exchange. This can be an easy way to have fun that doesn’t take a lot of time. Put a strict limit on cost, usually $20 or less and let it be known that you don’t have to participate. No one likes to be forced into a secret Santa or some sort of gift giving organized by their employer.
Share the company’s edible gifts and let employees share their treats.Sometimes vendors, clients, or partners will send gifts to management, often in the form of edible treats. Why not open it up to everyone to share in the goodies? It doesn’t cost anything. Additionally, invite employees to share their holiday treats if they want. You’ll find that a lot of people enjoy sharing their favorite things about the holidays as much as they do getting gifts. You could even host a holiday lunch where employees are invited to bring in their favorite treats. Regardless of how your company chooses to proceed through the holidays, it’s important to keep in mind your employees. It’s best to facilitate an environment where workers like to come to work. Though it may seem counter-intuitive to spend money on educational lunches or remote working days, these can help to ease employee stress. Employees who are stressed less will do better work and be more willing to stay to get work done.
We’ve all heard the millennial generation has shifted their focus from material possessions to experiences. They don’t want a thing that’s just going to take up space they don’t have, they want to do something. It should come as no surprise that for the holidays they’d prefer experiential gifts. If you have a Millennial in your life here are a few gift ideas we’ve gathered. Before making a purchase, consider the person you are buying for and their unique taste, your location and obviously your budget. For ease, we’ve broken it up into the categories Mind, Body, Soul, and Stomach.
MindArt If someone on your list is into art, consider getting them a membership to the art museum in your area. Memberships often include more access and special events. If they’re really into art you can’t beat this VIP tour of an empty Met museum in New York City. You’ll have the ability to go before the museum opens. Groups are 25 people max allowing you to see some of the world’s greatest artwork like you’ve never seen it before.
TravelFor most of us, travel is one of the most eye-opening experiences. To be in a place that’s uniquely different from normal awakens the senses and expands your imagination. We could recommend a number of travel experiences like sand boarding at Sand Dunes National Park, Exploring ancient caves in South America, but travel is so personal. We recommend sites like IF ONLY that offer more curated experiences in the United States and you can’t beat an AirBnB gift card that lets people choose their own adventure.
BodyGym Now, if the person you buy for spends most of their evenings on the couch, this probably isn’t the gift for them. If they are into sports and fitness and they don’t already have a gym membership, it may be just the right thing. You could do a month or even a year. You could even get one yourself and go together – built-in gym partners. If you’re gifting to someone who is always on the go, look into getting them a Classpass. This allows them to take classes at a gym located in different areas. For a person who is traveling a lot or is always moving, it’s great. Salon When you look good you feel good, but a lot of us don’t splurge for the fancy salon. When you can take advantage of a fancy salon, without the guilt of spending money it’s all the better. Find their salon and let them get their hair or nails did. Places like Drybar offer gift cards and you can get a wash and blowout for around $40. The best part that includes wine! Massage With the stress of the holidays, most of us just want to be in a quiet room for an hour. Throw in a relaxing massage that lets your friend unplug and escape the world for a bit. It may not be the most personal gift, but it never goes unappreciated.
SoulZen If they’re down with the downward dog, you could get them some local yoga classes or consider one of the many companies that offer amazing yoga retreats like Yogascapes, where you can join a small group of like-minded people for an amazing yoga retreat in “off the beaten path locations.” Music There’s nothing more personal than music. Consider tickets to a show one of their favorite artists or a subscription to a music service if they don’t have one. For those that are a little more free-spirited consider finding music in a really intimate setting through sites like Sofarsounds.com.
StomachThere’s no experience more common or universal than food and eating. And you have to do little more than scan Instagram to see how much people love food. With this in mind, there are so many directions you can go with food. From cooking classes to meal delivery services to full-on molecular gastronomy experiences it’s hard to go wrong with the food. Don’t have a big budget? Then you can always give actual food that you’ve made, it’s almost sure to be appreciated.
This is Part II of our three-part research series with LeverageRx, an online financial marketplace exclusively for doctors. Changes in healthcare often have a domino effect on employees and patients. The medical profession has to evolve and change to share the latest in medical findings. But what if those changes cause the people that patients depend on to burnout? Recent changes in the industry are taking a serious toll on physicians. Medscape’s annual Physician Lifestyle Report surveyed more than 15,000 physicians from 29 specialties. Of survey respondents, 42% of physicians reported burnout. Could change in the healthcare industry be boosting the number of physicians who experience burnout? What factors could be contributing to physician burnout?Let's take a closer look at the four most common causes of physician burnout in 2018.
RelationshipsMergers and acquisitions are on the rise in healthcare. In fact, they were up 57% in the first half of 2018 compared to the same period of 2017 per The Wall Street Journal. Nowadays, it can be rare to find a physician who isn’t practicing within a large healthcare group. Due to the rising costs of owning your own practice, joining a healthcare system may seem like a no-brainer. For physicians, it means less to worry about when it comes to things like:
- New technology.
- Medical equipment.
- With no time to run their own practice.
- Looking to take on less risk.
- Hours of operation.
- In-network insurance.
LoyaltyWhen patients lack loyalty to physicians, this causes a lack of enthusiasm for physicians. Patient loyalty may decrease due to the healthcare system and the absence of a personal touch. An underlying reason for the lack of patient loyalty to physicians is insurance. For patients and healthcare systems, coverage is subject to constant change. As of 2018, many health systems see this as a concern for their business. As a result, many have transitioned from volume-based care to value-based care. Utilizing a value-based strategy should help health systems rebuild lost patient relationships. Value-based care restores relationships by offering patients easier communication and more convenience. This shift to a value-based strategy will affect physicians in several ways, including:
- An increasing focus on technology.
- A more holistic approach to health in the community.
Emphasis on ProfitsFor many healthcare systems, a value-based strategy may cause additional physician burnout. This strategy requires physicians to perform more administrative tasks, which takes away from patient care. For example, if testing is required under this type of strategy, it would be imperative to explain as to why the additional testing is needed. Not only is there more paperwork that falls on the responsibility of physicians, but there could be less staffed physicians. In addition, health systems routinely only contract with a percentage of physicians of one type of specialty. This lack of staff depth leads to:
- Longer regular working hours.
- More overtime hours.
- More on-call duties.
- Too many bureaucratic tasks (paperwork) – 56%
- Spending too many hours at work – 39%
- Insufficient compensation – 24%
Student Loan DebtPhysicians illustrate a concern for financial wellness. To pursue a career in medicine, most need student loans to finance their education. In turn, seventy-five percent of medical school graduates begin practice with debt. What's worse is that the average medical school grad carries $192,000 in debt. It’s no surprise that the burden to pay off these loans can cause extreme financial strain for young physicians. And although many overcome to lead successful careers, some never fully recover. According to the Medscape Physician Wealth and Debt Report of 2018, most school loans are paid off by age 50. Thirty-two percent of physicians surveyed were still paying down their own student loan debt from medical school. With so many physicians paying down student loan debt, it's no wonder their financial outlook is unique. More money for student loan payments means less money for lifestyle spending and retirement planning. This financial stress extends beyond large monthly payments, too. It also impacts their experience as first-time homebuyers. In addition to the long hours physicians typically work, they now have little money to add to their budgets. In fact, 24% of physicians in the Medscape survey said that insufficient compensation contributed to their burnout. And when asked what could be done to reduce burnout, 35% said: “increase compensation to avoid financial stress." In a large healthcare system, it can be tough to stand out. Most CFOs are not closely involved with physicians. This lack of engagement means physicians are less likely to get the financial resources they need. Most raises and bonuses in large healthcare systems come at a preset rate or a generic structure. As a physician, refinancing student loans can offer significant cost savings. Depending on the repayment plan, this is possible both:
- Over the life of the loan.
- On a monthly basis.
Key takeawaysLike student loan debt, physician burnout is a crisis affecting the healthcare industry today. Based on our research, the former is actually fueling the latter. But that's not the only culprit. Other leading causes include:
- Less meaningful relationships.
- A decline in patient loyalty.
- Profits over work-life balance.
From hoverboards and iPods to boy bands, trends will come, and they will undoubtedly go. Anyone who has experienced and come through the other side of a trend can look back and laugh, but we aren’t sure about their wallets. At Education Loan Finance, we refer to spending on the latest “it” items as “trend spending™”. Always following the latest trends can wreak havoc on your personal finances. We are not saying don't do anything trendy and live under a rock. What we are saying is that rewarding yourself for making good decisions is important, but evaluate that choice carefully. Let’s take a look at the latest trend spending™ taking place, how much money is actually being spent and how it could add up over time.This pressure to join in on the cool coffee trend can come down on your wallet like a hammer. The average cost for a latte at Starbucks® as of 2018 was $5.75 for a Grande, and that doesn’t include any fancy cake pops! If you bought yourself a latte, once a week for a year, what are you really spending? 52 weeks a year x 5.75 = $299.00 a Year! You’re paying about $300 on lattes a year. Think of how far that money could go towards your student loan debt.
VapingWe’ve all been there, walking or driving along when you see the occasional cloud of vape on the sidewalk. If you’re lucky, that cloud of vape isn’t directly in front of you while you’re walking and you’re able to dodge that second-hand vape cloud. In addition to the envied clouds vaping creates, the flavors can range from cereal flavors to candy flavors. Just like the flavors, the mods come in a variety of sizes too, from huge mod kits that make tons of vapor to tiny USB chargeable vapes like the JUUL®. Vaping has become one of the biggest trends in the U.S. The more vapor you can produce the “cooler” you are according to the vaping community. According to a CDC report released in October 2018, JUUL Labs® account for nearly one in three e-cigarette sales, nationally. While vaping might be the latest trend, remember that its long-term health effects are still unknown. Couple the possible health effects with the cost and you might just convince yourself to stop. JUUL® Starter Kit - $45 Four pack of pods $16. Let’s assume those are purchased twice a month, so that is 24 x $16 = $384 Total Cost of Vaping for a Year= $429 Assuming that you bought a JUUL® unit to do your vaping and you bought a new pack of pods every two weeks or twice a month, you’d be spending $429.00 a year. Over the course of four years, that’s about $2,000! We didn’t even include any sales tax in this equation, but many states are rolling out taxes on vaping products.
SubscriptionsSubscriptions used to be associated with Highlights® magazine or catalogs your Grandma would receive in the mail, but the 21st century has revitalized the subscription. Now, subscriptions can get us movies, vitamins, clothes, music, even dating sites and all are currently available at our fingertips. The subscription box industry, in particular, is experiencing rapid growth. Since 2014, the subscription box industry has increased by 890% according to a 2018 report by Hitwise. Subscriptions, though convenient, can really end up costing you in the long run. The danger is that once your card is on file, it’s so easy to forget about the service. Here’s a list of the most popular monthly subscription services of 2018. Let’s say, you signed up for the FabFitFun® subscription box for a year. Now, this box is sent only four times a year based on the season. The box comes with full-sized premium products. In addition to the box you receive, you get access to the FabFitFunTV which shares workouts, access to exclusive member sales, and you have access to the entire community online. Now, that box is $50.00 per season or $200 a year.
Fancy “Dranks”It’s hard for a month to pass without seeing some crazy coffee creation from your local Starbucks®. Recently, the Witch’s Brew Frappuccino outshined the previous favorite, Unicorn Frappuccino and became an Instagram® trend. Drink trends can really spiral out of control and quickly. If you actively participate in social media by checking your Instagram® or Facebook® every once in a while, you can’t help but notice them. In some weird way, all these Frappuccino drinks and IPAs flooding your news feed put pressure on you to join in and go purchase one of these beverages.
Health FoodThe latest trend in the food and beverage industry is likely to come from your favorite online health influencer. It’s also likely that drink ends in a vowel like Kombucha, Matcha, or bubble tea. These drinks have been around for decades, but lately, they are skyrocketing due to a new health movement. Kombucha and other fermented drink sales were up 35.6% in 2017 according to FoodNavigator-USA. This fancy probiotic drink can really end up costing you at $3.75 per bottle. If you’re looking to drink it once a day, it adds up to $1,368 a year in total cost on Kombucha. We aren’t saying to deprive yourself of the latest health trends, but we’re suggesting to think wisely before deciding to purchase it. Really understand how that small amount of money can add up to a lump sum that can easily be applied to debts. Maybe even try making your own Kombucha, there are tons of websites and directions available online. Bubble Tea or as some may know it as pearl milk tea, boba juice, or just boba, has been in the US for years, but it’s recently gaining major trend status in 2018. There have been multiple chains arising that specialize in Bubble Tea. You may know these chains as Kung Fu Tea® or Boba Guys®. Bubble Tea could make a great date or even a trendy place to stop with friends. It offers a nice alternative to the usual coffee or beer we’ve all grown accustomed to. We wouldn’t recommend making Bubble Tea a daily habit or even a weekly habit because like Kombucha the small amount spent could really end up adding up. The average cost for a Bubble Tea is $3.50, and if you choose to go every day for a year, it equates to about $1,277. That is some serious money that can be used to get out of debt or start investing in retirement fund money.
Quick FoodFood is important because it keeps us alive, but that doesn’t mean we need to spend all of our income on it. Simple changes to your everyday life like packing lunch for work could really help you save in the long run. Eating out can be expensive, time-consuming, and even dissatisfying. Before you pick up your cell and place an online order, let's take a look at these stats. According to the 2017 Bureau of Labor Statistics’ Consumer Expenditure Survey, Millennials ages 26-34, spent $3,416 annually on food away from home. Imagine for lunch every day at work you bought a burrito from Chipotle®. Just a burrito is about $8.00. Now, our cost has no fancy drinks because we learned our lesson on trend spending™ on sparkling water when the office has free and classic H2O available. We’ll assume that you work five days a week and it’s typically Monday through Friday. We aren’t going to account for vacations or days off in our math. Let’s see what your yearly cost for lunch is… $8 Burrito Cost x 5 days in a work week = $40 a week spent $40 x 52 work weeks per Year = $2,080 spent a year Though it’s so easy to get sucked into the trend of going out to lunch and grabbing something easy, please be cautious. Apps like UberEats®, GrubHub®, and Seamless® may seem convenient, but they can cause unnecessary costs. Try to cut back on eating out or ordering in food. We know, easier said than done. Especially, when it comes to working all day and having to make yourself dinner when you get home. Add to it cleaning up any dishes you may have used, and it just gets overwhelming. This doesn’t have to be an all or nothing situation though, try packing your own lunch weekly. If that seems like a lot maybe only purchase lunch on Fridays. These small life changes could have an impact on your finances, and they are just creating good spending habits as you move further on into adulthood. Just remember that the amount of money spent on food could pay off student loans, or be added to the down payment on a house.
Give & TakeWhether you are trying to get out of debt or save up money to achieve a financial goal, there is always a little give and take. You deserve to enjoy yourself and treat yourself every once in a while with the latest trend, but don’t get so caught up in the trend spend™ craze that you lose any sense of the amount you’re spending. Trends may be great - I mean, after all, they did become a trend, but you need to stay focused. If you are finding it difficult to stay focused on your financial goal, try making a compromise of the situation. It will always help to remind you that it’s just that, a trend. Trends will come, and they will go, but your finances will be with you forever. Be the financially responsible you that we know you can be!
When understanding student loans or any part of the finance industry for that matter, you’ll notice similarities. One significant similarity is that all requested borrowers of a loan will have their information reviewed by an underwriter. It sounds complicated, but in reality, the guidelines of a loan underwriter’s job are relatively simple. In fact, you could say that the entire application process works like that of a dating app and the underwriter is the Tinder® that will get you there.