Why Student Debt Hurts Workplace Wellness

A recent survey found that 7 in 10 employers plan to enhance their benefits offerings in 2023, with many prioritizing benefits that promote employee wellness. And that’s with good reason, since workers who believe their employers care about their wellbeing are less likely to quit.

But health coverage and mental health resources aren’t enough. In order to show their workforce they really care, HR leaders need to take a holistic approach to addressing the barriers that hold employees back from living their best lives. 

And one of the most common barriers: student loan debt. In fact, 8 in 10 professionals with student loans say their college debt is a source of “significant” or “very significant” stress, and more than half of all borrowers have experienced mental health issues caused by the emotional impact of their student debt. 

Here’s a closer look at why student debt has such a negative impact on wellbeing:

Closes the door to financial stability and security 

Student loan payments are a huge expense, with the average monthly bill ringing in just shy of $400, and one in three borrowers facing a total that exceeds their monthly rent or mortgage payment. 

But college debt doesn’t just upend borrowers’ finances in the near term — it also jeopardizes their future financial security:

• One in four borrowers put off building emergency savings in order to prioritize their loan repayment, increasing the likelihood that unplanned major expenses will turn into a financial crisis
• College debt is the reason why a quarter of eligible-but-not-enrolled employees don’t participate in their workplace’s retirement plan 
• Even those who do save are falling behind, with the average 30-year-old borrower having just half the retirement savings of their non-indebted peers

Delays personal milestones

Student debt holds borrowers back from achieving personal goals, too — and with the average debt payoff timeline spanning 20 years, it takes many borrowers decades to catch up:

• Half of borrowers considering pursuing further education will ultimately decide not to go back to school in order to avoid taking on more debt
• Half of non-homeowners say they can’t afford to buy a home because of their student debt
• 14 percent of borrowers delay starting a family due to the financial strain of student debt

Crushes job satisfaction and performance

Most borrowers start their professional lives already strapped with tens of thousands — if not more — in student debt. And all too often, that burden sets borrowers up for less fulfilling, less successful careers:

• The more borrowers owe, the more likely they are to prioritize higher pay over job satisfaction — thus driving poor performance and greater turnover 
• More than half of borrowers say their student debt has hurt their career goals 
• One in three borrowers admit that their personal finances are a major distraction at work

What employers can do

Student debt benefits are a critical component of a wellness benefits package that makes employees feel seen — and in turn, gets employers on the fast track to higher retention and a happier, more productive workplace culture. That’s because student loan benefits:

• Drive impact at scale: two-thirds of college-educated adults have student debt
• Support every employee demographic, including those most at risk of turnover: women and people of color owe more than their male and white peers, while those in high-churn professions (such as teaching and education) often have the highest student debt-to-income ratios
• Address a major barrier to wellbeing from multiple angles: employers can take an active role in helping workers pay off student loans — with tax-advantaged direct contributions and SECURE Act 2.0-compliant student loan retirement match programs — while also empowering employees to define their own path forward with the help of repayment optimization tools and coaching services