- Workers with more student loan debt are more likely to be looking to leave their jobs, the ADP Research Institute has found. As the amount of indebtedness increases, so too does the likelihood of job searching; 64% of those with more than $150,000 in debt are looking for a new job, ADPRI found, compared with 58% of those with $50,000 of debt or less.
- ADPRI found that workers’ perception of their debt played a big role as well. “How workers feel about their debt is more influential than the actual amount they owe,” Mary Hayes, research director for ADPRI, wrote in a blog post on the findings. “Employees who perceive their debt burden to be great, whether it is or not, are far more likely to be shopping for a new job.”
- The findings may be an indication that workers hope to find better-paying jobs, Hayes theorized. “If that’s the case, student loan payments could trigger a labor-market shift as workers look for better opportunities,” she wrote.
The impact of student loans on worker behavior had been relegated to the background over the past few years, as federal student loan payments and interest accrual were put on hold in March 2020 as part of the government’s effort to provide emergency COVID-19 relief. That period has come to an end, however; the 0% interest rate ended Sept. 1 and the government began requiring payments again in October.
The resumption of student loan collection — like the “child care cliff,” an ending of the American Rescue Plan Act’s funding for child care providers — may be one of the latest changes to have downstream effects for employers as COVID-19 relief dries up.
Employers looking to bolster employee retention can explore certain benefits to ease workers’ debt burden. Student loan repayment assistance is one option — a benefit that seemed to gain steam in the years before the pandemic. A 2018 survey from CommonBond showed workers were enthusiastic about the prospect of such a benefit, with 4 in 5 clamoring for their employers to offer it.
ADPRI also recommended employers offer financial education. “Resources that help with budgeting, debt management, and the basics of credit and interest can help alleviate stress related to student loans,” Hayes wrote, suggesting companies connect workers with the Federal Deposit Insurance Corp.’s MoneySmart program and FIS Global’s financial literacy curriculum.
In January 2024, ADPRI pointed out, employers will also be able to take advantage of the Secure 2.0 Act. According to Mercer, that will allow employers to treat an employee’s qualifying student loan repayments as elective deferrals or after-tax contributions to certain defined contribution retirement plans. This will give employees the opportunity to receive employer matching contributions — even if they aren’t contributing to the plan.
Correction: An earlier version of this article included a headline that did not accurately reflect ADP’s data. It has been updated to indicate that workers with student loan debt are more likely to job hunt.