Student debt is a big issue this back-to-school season. Accordiung to estimates, student loans in the U.S. recently reached $1.19 trillion. And as I shared in my latest MediaPost article, the stats are staggering:
- Over 40 million Americans have student loan debt
- The average American is carrying $26,000 to $29,000 in student loans
- Only 37 percent are making payments on time and reducing their balances
The student debt crisis is such an urgent problem that presidential candidates are now compelled to share their plans to address it. Leading Democratic presidential contender Hillary Clinton, for instance, revealed her $350 billion plan to reduce student debt. (Before he dropped out, former Republican presidential hopeful Scott Walker was been touting his accomplishment of freezing tuition at the University of Wisconsin for four years.)
The high level of student loans is bad news for business. For one, it is causing young adults to delay moving out; the Pew Research Center estimates that about 26 percent of millennials still live with their parents today. They’re also postponing getting married, starting families and launching their own businesses. These have tremendous economic consequences.
Companies need to find a meaningful way of engaging with young adults who are saddled with debt. One recent example is the consulting firm PricewaterhouseCoopers, which, starting next year, will give $1,200 a year to employees fresh out of college to help them pay off student loan debt. As PwC’s example shows, there are ways of connecting with young customers in way that benefits both the brand as well as the customers.
Here are three ways your brand can more effectively connect with teens and young adults and assuage their concerns about student loans.
- Offer scholarship opportunities.
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.
Scholarships are a great way of engaging entrepreneurial teens in co-creation and ideation. For example, H&M could offer a scholarship to the fashion student who designed the best new jeans for back-to-school season. A company like Ford could offer scholarships to students with the best ideas on how to improve fuel efficiency. Companies should 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. Starbucks, a company that is frequently a leader in HR practices, provides a good example. It provides college education to every benefits-eligible employee through 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.
- 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.
Providing a flexible work environment that caters to students creates mutually beneficial, life-long relationships with these young customers. This is something I know firsthand: I started in media through a paid college internship, and I’ve developed a life-long loyalty to that company because of the way they treated me. When I was 19, the company gave me a paid job with flexible hours, showed me the ropes, promoted me onto staff at the start of my senior year and provided a springboard to the rest of my career. Today, I still watch all their programming, evangelize it to others and support them every way I can in our professional collaborations.
- Market and communicate more thoughtfully.
This 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 people in these generations, home ownership might not ever be an attainable life milestone.
Even affluent young customers (those making six-figure incomes, often with no mortgages or kids to support) might not have as much disposable income if they’re in the process of paying off big student loans.
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. Market research programs should be able to thoroughly investigate changes to young people’s lifestyles. A more holistic picture beyond your own product or category is required, and you need to capture insight about the attitudes and behaviors of your young customers. 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.
Of course, the issue of increasing student debt requires complex socioeconomic solutions that are, for the most part, out of the hands of businesses. But by providing students with the opportunity to engage, work and co-create, companies can make a more meaningful connection with young people today and potentially keep them as customers or employees in the long term.
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