Background: Student loan debt remains a significant financial burden for many employees. Recent actions by the current administration to restructure the Department of Education have raised concerns about the future of federal student aid programs, such as the Public Service Loan Forgiveness (PSLF) program, which benefits public sector employees. This study, based on a survey of 2,036 public and private sector employees, explored the relationship between student loans, financial well-being, and the role of employer-provided resources.

Findings: Public sector employees were more likely to have student loan debt (43%) than their private sector counterparts (36%). Current student loans negatively impacted financial well-being in both sectors, measured by lower scores on the Consumer

Financial Protection Bureau's (CFPB) Financial Well-Being Scale. This Scale assesses financial security and freedom of choice (being able to make choices that allow one to enjoy life in the present and on track to meet future financial goals). However, a notable distinction emerged: public sector employees who had paid off their loans showed little lingering negative effects on their CFPB well-being scores, whereas private sector

employees continued experiencing decreased financial well-being even after repayment. Other key findings:

Just 29% of public sector employees reported receiving information about PSLF from their employer.

Merely receiving PSLF information alone didn't improve financial well-being.

Employees in both sectors who received general debt management resources from their employers reported significantly higher financial well-being.

Source: MissionSquare Research Institute Survey of 2,036 Public and Private Sector Employees

Bottom line: Current student loan debt is a meaningful drag on employee financial well-being. Private sector employees continue to feel a “debt overhang” impact even after repayment, likely due to delayed wealth accumulation. Public sector employees do not appear to experience this long-term effect, suggesting that access to loan forgiveness programs may offer some mitigation. However, communication alone isn’t enough.

Employers who provide broader financial resources, such as debt management resources, can measurably improve employee well-being.

Insights shared by guest contributors are their own and do not represent the views of DCIIA or the RRC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.