A new study reveals the distinct disparities public workers face with student loan debt when compared to private sector employees.
The study, co-authored by researchers Zhikun Liu, Eric T. Ludwig, Chet R. Bennetts, and Ashlyn Rollins-Koons of the MissionSquare Research Institute, found that public sector workers are more likely to have student loan debt that private sector workers, at 43% compared to 36%.
Studies have shown the effect student loan debt can have on borrowers—even preventing some from achieving major financial goals like saving for retirement or buying property. A past study from Fidelity of 2,000 students and new college graduates reported that borrowers said their debt had averted them from saving for retirement, getting married, and buying a home.
Holding off from these goals could further impact long-term financial wellness, said Liu.
“Balancing competing financial priorities while managing student debt can significantly hinder wealth accumulation,” added Liu. “Employees may be forced to delay contributing to retirement accounts, investing for future goals, or saving for major purchases — creating lasting gaps in financial well-being, even after their loan obligations are fulfilled.”
While public sector employees have access to student loan forgiveness plans, including the Public Service Loan Forgiveness (PSLF) program, only 29% say they’ve received information about PSLF from their employer. Further, 48% of all employees say their employers do not offer debt management resources, including 49% of private sector workers and 42% of public sector employees.
In the study, researchers stressed the value of student loan debt management and relief programs for private sector workers and urged public sector employers to expand education and support strategies surrounding the PSLF program. The findings showed that public and private sector workers who receive general resources on debt management exhibited improved financial wellbeing.
The report also called for further research analyzing the correlation of financial wellbeing and student loan debt management, and for added policy research.
“Comprehensive debt management support, financial literacy education, and personalized counseling services are all opportunities where employers can offer support for their workforce, particularly those in the public sector,” said Liu. “To help improve financial outcomes for all workers, employers and policymakers need to not only offer these resources, but ensure they guide their workforce in understanding them as well.”
This report surveyed 2,036 public and private sector employees, with responses collected by MissionSquare Research Institute in collaboration with Greenwald Research from April to May 2024.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.