A new report by MissionSquare Research Institute reveals that student debt significantly impacts both public and private sector workers in the US, contributing to financial stress and influencing employment decisions.
The study found that 93 percent of private sector workers and 89 percent of public sector employees who carry student loans view their debt levels as problematic, with more than 44 percent of student loan holders saying it's a major problem.
The report highlights that student loans are a key factor in job mobility, particularly for typically lower-paid public sector employees. Thirty-eight percent of public workers cite student debt as a major reason for considering other employment opportunities, compared to 25 percent of private sector workers. Among K-12 educators, the percentage is even higher, with 41 percent indicating their debt heavily influences their job decisions.
“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, Vice President of MissionSquare Research Institute, said in a statement revealing the findings.
While credit cards were by far the most common type of debt, survey participants said they experienced the most worries from student loans. That includes concerns about paying back that debt (40 percent of public workers and 37 percent of private employees), not being able to afford medical bills because of it (30 percent for both groups), and paying off credit cards (28 percent and 27 percent, respectively). Tellingly, just over half of both public and private sector employees agreed student debt, or lack of it, as a factor when deciding to start saving for retirement.
Other findings from the report point to student debt's far-reaching impact, with at least 15 percent of workers with student loans missed three or more payments in the last six months, and 15 percent expect it will take more than 20 years to repay their loans. Despite these challenges, only 29 percent of public sector employees reported being informed by their employers about Public Service Loan Forgiveness options.
With total US student debt now surpassing $1.7 trillion, the Biden administration has rolled out several measures to provide relief to borrowers from across different segments of society. In the latest development, the Department of Education said on Monday that federal student loan payments would remain on pause for at least six months for an estimated eight million borrowers under the White House's SAVE plan, billed as the most affordable repayment plan in history.
The Biden-Harris administration's efforts have faced legal challenges by Republican states, including Kansas and Missouri, who argued that the federal government is overreaching its authority by attempting to erase debts through the SAVE plan.
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