A new study suggests that student loan debt plays a significant role in workers’ decisions to accept or stay in jobs in the United States, with a stronger impact in the private sector.
The report, released by the MissionSquare Research Institute, found that 62% of private sector employees and 56% of public sector employees said student loan debt influenced their job acceptance decisions. Workers carrying student debt were also less likely to stay with their employer, with 39% reporting they would remain in their current job compared to 61% of those without student debt.
“Student debt is a significant issue in the U.S., impacting various aspects of workers’ lives,” said Zhikun Liu, head of MissionSquare Research Institute and co-author of the report. “Our analysis clearly shows the adverse impacts of student loan debt in multiple areas for both public and private sector workers.”
The study, titled The Ripple Effect of Student Debt: Shaping Careers, Financial Choices, and Well-Being in Public and Private Sectors, examines how debt affects employment decisions, career progression, and financial planning. It is based on survey data from 2,036 employees collected in 2024.
Impact on career advancement and morale
The report found that many employees believe student debt has hindered their career advancement. Among public sector employees, 35% of women and 31% of men said their debt limited their opportunities. In the private sector, 28% of women and 43% of men reported the same concern.
Debt also appears to affect workplace morale. In the public sector, 23% of employees with student debt reported low work morale, compared to 18% of those without debt.
Financial trade-offs and short-term planning
The study also found that student debt influences financial behaviour. Employees with student loans were more likely to focus on short-term financial planning, with many avoiding long-term investments altogether. Those who did invest tended to favour short-term strategies, which could limit their ability to accumulate wealth over time.
“It’s troubling to see that student debt triggers an emphasis on short-term planning, short-term investment, or not investing at all,” Liu said. “This restricts student debt holders’ opportunities to benefit from investment compounding, hindering their ability to accumulate wealth.”
Public sector employees with student debt were also 14% more likely to believe their retirement savings were inadequate, while private sector employees with debt were 9% more likely to share that view.
The report’s authors suggest that these findings provide insight for employers looking to support employees with student debt, particularly through financial wellness initiatives and long-term planning resources.
