Student loan stress makes workers 2x more likely to quit, says report

As attracting and retaining workers continues to be a priority for many companies, the issue of student loan debt will also be on the minds of both young workers and their employers. Recent findings from the ADP Research Institute suggest that much like fears of a recession, the “vibe” of student loan burdens might be driving employee discontent, and that developments in this area in 2024 will be closely watched by employers and employees alike.

The perception of student loan debt, instead of causing employees to hang on to their current jobs, instead seems to be driving them to look for greener pastures, the ADP report found. “Yes, a worker’s outstanding debt does influence whether they’ll stick with their current job or find a new one. But we found that workers with more debt are more likely to be looking to leave their jobs, not less likely,” the researchers wrote. “And how workers feel about their debt is more influential than the actual amount they owe. 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 heavy burden of student debt

To be sure, those with higher student debt are more likely to find it to be a “heavy burden,” according to the ADP report.  The institute’s quarterly survey found that workers who called their student loan debt a “heavy burden” were 2.4 times more likely to be in the process of leaving their current employment than other workers.

Other findings of the report:

• 64% of workers with over $150k in student debt are in the process of leaving their current employer.
• 59% of workers with between $50k and $150k in student debt are in the process of leaving their current employer.
• 58% of workers with between $1 and $50k in student debt are in the process of leaving their current employer.
• 48% of workers with no student debt are in the process of leaving their current employer.

“In any given month, about half of workers are engaged in the process of leaving. Among workers with student loan debt, that number increases by more than 10 percentage points to greater than 58%,” the report concludes. “Any level of student debt increases a worker’s intent to leave, but people with the biggest outstanding student loans are twice as likely to be looking elsewhere compared to those who have no student debt.”

A determination to address student loan debt

There is an ongoing determination, particularly by the Biden Administration, to address the burden of student loan debt. Last year, President Biden attempted to forgive student debt up to $20,000 for millions of Americans. The Supreme Court struck down that initiative, but the administration has implemented a number of other student loan relief measures.

In 2023, The Education Department approved at least 855,000 borrowers for student loan forgiveness under the Income-Driven Repayment Account Adjustment, according to an analysis in Forbes.

Americans with student loan debt have returned to making payments on that debt after a three-year-break that came as the nation dealt with the COVID pandemic. With the student loan pause ended, a host of new problems sprung up with processing delays, billing errors, and communications problems all being reported, according to the Forbes account.

In addition, the SECURE 2.0 legislation goes into effect this year; that law allows employers to match their workers’ student loan payments with contributions to a 401(k) retirement account—a move that many think will help younger workers start their retirement savings much earlier than they might have otherwise.

Related: Why does the student debt of their workforce matter to employers?

“If you’re trying to attract younger people that have a lot of student loan debt, for example, having this in your plan may be very attractive,” a wealth-planning expert told Business Insider.

The ADP report suggested that employers who are concerned about retention and recruitment should keep employees informed about these developments and about financial planning in general. “Resources that help with budgeting, debt management, and the basics of credit and interest can help alleviate the stress of student loans and potentially boost employee retention and engagement,” the report said.