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Student Debt Is a Major Source of Economic Stress for U.S. Public and Private Sector Workers, New MissionSquare Research Institute Study Finds

Public Sector Employees, Especially Those in K-12 Education, Consider Student Debt a Key Factor in Employment Decisions

October 22, 2024

WASHINGTON, D.C. – A new report from MissionSquare Research Institute reveals that 93% of private sector employees and 89% of public sector workers with student loans consider their debt levels problematic. As personal finances become the biggest source of stress across both the public and private sectors, student loans are considered a major problem by more than 44% of U.S. workers who carry student debt.

The study highlights that student loan debt impacts employment decisions, particularly in the public sector where salaries are typically lower. Public employees (38%) are more likely to view student loan debt as a major factor in seeking other employment compared to private sector staff (25%). This concern is even higher among K-12 public school employees, with 41% citing it as a major factor.

These findings are detailed in the new report, Student Debt Impacts on Public and Private Sector Employees, which examines how student loans affect employees and employers’ ability to recruit and retain workers. Read the report.

Key Findings:

  • Personal finances are the primary source of stress for both public and private sector employees.
  • While credit card balances are the most common form of debt, student loans cause more worry.
  • At least 15% of workers with student debt missed payments three or more times in the past six months.
  • 15% of workers expect to take more than 20 years to repay their student debt.
  • Only 29% of public sector employees report their employers informing them about Public Service Loan Forgiveness programs.

“This research is crucial because student debt significantly impacts both employees’ financial well-being and employers’ ability to attract and retain staff, particularly among public employees,” said Zhikun Liu, Ph.D., CFP®, Vice President, Head of MissionSquare Research Institute. “Our new report provides essential data to help state and local leaders consider whether initiatives like tuition reimbursement or loan repayment assistance could help strengthen the public workforce. This study also offers a range of actions employers can consider to alleviate issues associated with student loan burdens and stress.”

Total student debt nationally amounts to more than $1.7 trillion, with individuals in fields like nursing, engineering, teaching, and other fields often attempting to balance their career plans and other financial obligations with student loan repayment. In recent years, there have been various federal initiatives to suspend or forgive student debt. Although some of these efforts remain subject to litigation or debate, this study highlights the importance of student debt in employee recruitment and retention.

The report suggests proactive steps employers can take to address student loan issues, such as providing better information on loan forgiveness eligibility and creating incentives like matching contributions.

This research is based on a national survey of U.S. workers aged 18-49 regarding their education, occupation, job tenure, level of student debt, disposition of that debt, and how debt has impacted or is continuing to impact their career, morale, and personal finances. The survey included 2,036 respondents, with 1,001 working in state and local government and 1,035 in the private sector.

Data was collected between April 30 and May 21, 2024, and was weighted by gender, income, race, and industry type to reflect the distribution found in the U.S. Census Bureau’s Current Population Survey and the U.S. Census of Governments.

This report supplements a related study published earlier this year, Student Debt in State and Local Government: Impacts on Select Occupations, which provided an in-depth analysis of student loan debt levels across various state and local government public service positions.

About MissionSquare Research Institute

MissionSquare Research Institute promotes excellence in state and local government and other public service organizations to attract and retain talented employees. The organization identifies leading practices and conducts research on retirement plans, health and wellness benefits, workforce demographics and skill set needs, labor force development, and topics facing the nonprofit industry and education sector. MissionSquare Research Institute brings together leaders and respected researchers. More information and access to research and publications are available at research.missionsq.org.

About MissionSquare Retirement

Since our founding in 1972, MissionSquare Retirement has been dedicated to simplifying the path to retirement security for public service employees. As a mission-based, nonstock, nonprofit financial services company, we manage and administer over $80.5 billion in assets.* Our commitment to delivering results-oriented retirement plans, education, investments, and personalized advice sets us apart. Explore how we enable public service workers to build a secure financial future. For more information, visit www.missionsq.org or follow the company on Facebook, LinkedIn, and X.

* As of September 30, 2024. Includes 457, 401, 403(b), Retirement Health Savings (RHS) plans, Employer Investment Program (EIP) plans, affiliated IRAs, and investment-only assets.

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