In October 2023, the Department of Education ended the pandemic payment pause on student loans. Early reports suggest that this burden was too great for many borrowers. As of December 2023, the Department of Education reported that 40% of borrowers had not yet made payments on their student loans.

In the U.S., 43.5 million adults hold student debt. In our recent survey with Savi of over 3,000 student loan borrowers, 87% of borrowers reported feeling stressed about their loans. So we can assume about 37.8 million borrowers are currently experiencing some measure of psychological distress. 

Stress can result in a variety of negative effects on your body, like increased risk for heart attack, weakened immune system, and chronic neck and back pain. In the workplace, stress can result in higher levels of absenteeism and turnover, poor performance, and low morale. Chances are, employers have a lot more employees experiencing student loan stress than they realize. Employer student loan benefits can help. 

A lot of Americans are stressed out over student loan debt 

In our survey, almost one-quarter of all borrowers reported regret over taking out loans, over 40% experienced stress about their loans, 20% reported hopelessness with their loan repayment, and less than 40% said their education was worth the financial cost. Women, Black and LatinX borrowers, and those without a bachelor’s degree experienced higher levels of regret, stress, and hopelessness, and perceived less worth in their education.

Additionally, borrowers struggling with their loan repayments were the most likely to report experiencing all of the psychological stressors measured in the survey. Borrowers who reported being behind on their loan payments, having their payments paused on forbearance or deferment, and being in default were categorized as borrowers who were struggling with their loan repayments. Forty-three percent of the total sample of borrowers reported struggling with repayment. Struggling respondents were twice as likely to say they deeply regretted taking out loans, 18% more likely to carry stress over their loans, and 10% more likely to report hopelessness over repaying their student loans compared to respondents who were not struggling. Struggling respondents were also 19% less likely to believe their education was worth the financial cost compared to respondents who were not struggling.

The wide-reaching impact of stress

Headlines around the student loan crisis, the mental health crisis, and claims that no one wants to work anymore have been circulating for some time now. While it’s impossible to know every individual’s unique circumstances, it’s fair to draw connections between these trends. 

Stress and regret can have wide-reaching negative physical and psychological impacts on a person’s life. Hopelessness, including perceiving the future as uncertain, has been diagnosed as a precursor to depression. These psychological factors can have a significant impact on borrowers’ mental and physical well-being.

Our data show that student loan debt causes psychological distress for many individuals. Poor mental health can decrease employee productivity, engagement, and performance, ultimately diminishing a company’s bottom line. 

Aside from caring about employee well-being simply being the right thing to do, efforts to diminish their stress can have tangible financial benefits for organizations. 

How employers can help

There are good reasons for employers — particularly employers in low-wage sectors — to help their workers manage their student loans. A stressed workforce is a less productive workforce and, as we’ve shown above, student debt generates a great deal of stress for individuals. Additionally, workers with student loan debt are less likely to remain in a job

More and more employers are recognizing their responsibility to help, not only to support their workers but also to improve their bottom line. Loan repayment support may be a powerful retention tool to mitigate the high and costly turnover of employees.

Federal programs allow employers to do more than educate their employees on student loan repayment. Federal policies give employers a tax incentive to assist with their employee’s loan repayment. Public sector and non-profit employers can certify their employees as eligible for loan forgiveness. And, with the Secure 2.0 Act that went into effect early this year, employers can now accept their employees’ student loan payments as the match payment for their retirement account, allowing borrowers to build retirement by paying back their student loans.    

Of course, there are various factors that impact mental health aside from student loans — and many reasons we should care about helping those experiencing psychological distress beyond its impact on work. But the link between these two crises presents a clear opportunity for employers to step up for their struggling employees, supporting not only the people who keep their business running but also their own bottom line.