The emotional toll of student debt at work – Quartz at Work


Lately, a number of US politicians, but mostly Democratic presidential candidates, have offered promises of loan cancellations, interest rate caps and tax code changes, all designed to reform a failing system. funding education – and no doubt to appeal to the more than 43 million people who hold US $ 1.6 trillion in student debt.

The viability and logic of their various ideas have not been unanimously celebrated, but they have, at the very least, struck a chord.

Arguably, the public conversation about student debt has recently become more emotionally charged and much more personal, if social media is any guide.

It now appears that a similar shift, towards acknowledging debt not just as a financial burden but as an emotional burden, is happening among employers who offer student loan benefits.

Yes, a small number of companies including PWC, Aetna, Hulu and others, started offering benefits that pay off loans directly, with monthly payments of $ 100 or more, a few years ago. At that time, however, they largely saw it as an opportunity to stand out in recruiting fairs and help prevent employees from leaving in a competitive job market.

Nowadays, more and more companies are apparently motivated to treat student loan debt not strictly as a flashy advantage, but for the sake of what it does to the psyche and ambitions of students. employees – and therefore to a company’s bottom line.

The “web effect” of student loan stress

Shann Grewal, vice president of IonTuition, a student loan aid company that provides loan management and telephone counseling services, says he’s noticed the change in his clients. The evolution may have been inevitable, he suggests, as more companies saw employees facing defaults and wage garnishments, or noticed that employees were not taking advantage of others. benefits, such as flexible expense accounts, which in turn left them more exposed to the financial burden of high medical bills.

As employers began to ask questions, he says, they came to understand the “web effect” of student debt obligations and the threat that hardships pose to productivity and productivity. the moral.

“I think employers are really starting to realize that because student loans are so prevalent, there is a need to have an element of, yes sure, financial wellness programs, but really a good one. be general, ”he says.

Indeed, in the latest PwC Employee Financial Well-Being Survey, employees cited money issues, including debt, as the number one cause of stress in their lives, more often than they did. cited other life stressors, such as their health or problems at work. And the Society for Human Resource Management recently found that the benefits of student loans, in particular, ranked just behind paid time off and slightly ahead of the ability to work remotely as the benefit most sought after by young employees outside. of the University.

Carl Gagnon, assistant vice president of global financial well-being at Unum Group, recently told the Wall Street Journal that the benefits of student loans that creatively respond to the debt crisis, for example by allowing employees to cashing in unused vacation or matching loan payments with 401k contributions to the retirement fund – has become “a basic need”. Citing studies, he suggests that student loan debt “harms employees’ well-being, their concentration at work and their retirement planning.”

Poor sleep and high anxiety levels

In fact, the empirical evidence on the health effects of student indebtedness remains limited to research that establishes associations, not causalities, and non-academic surveys. Nonetheless, the results have been compelling and are gaining increasing attention, says Katrina Walsemann, associate professor at the University of South Carolina and director of the Carolina Consortium on Health, Inequalities and Populations.

In 2015, Walsemann conducted a landmark study with UCLA peers that analyzed 13 years of data from a nationally representative sample of nearly 9,000 American adults, extracting information on those who reported hold student loans. They found that student debt was correlated with lower levels of psychological well-being for 25- to 31-year-olds, even after accounting for income, family wealth, occupation, and educational attainment.

Since then, other researchers have examined other important behavioral patterns related to debt. “A growing body of research suggests that student debt has social, economic and health implications,” says Walsemann. For example, people seem to be putting off marriage or homeownership, choosing well-paying jobs over interesting careers, and neglecting their 401k because of their student loan bills. “We haven’t done any randomized controlled trials to find out if it’s really the debt that’s causing all of these things – it’s a little hard to randomly attribute people to debt – but the more you see it in different studies, the more you feel like this could be something that’s actually true, it’s a real relationship, ”she says.

In addition, several studies have shown that debt of other types, including credit cards or car loans, are strongly associated with serious problems such as poor mental health, mental disorders, depression and substance abuse. Walsemann doesn’t think student debt should be viewed any differently, even though it supposedly symbolizes a ticket to social mobility.

“I’ve heard the argument before, ‘Well, you get something out of it’” when you take on an education debt, she said. “But usually when you have debt you get something. You get a product, a house, or a car, or a degree, so I’m not very convinced that [getting something] makes this debt different. (In addition, she points out, several million people in the workforce are in student loan debt. without diploma, because they left school before graduating.)

On the flip side, a feature that sets student debt apart from other bonds is that it is almost impossible to escape, even in the event of death. Depending on the type of loan you have, your bills will land in your partner’s lap or be taken out of your estate if you die before paying what you owe.

It’s no wonder, then, that people are talking about drowning, being shipwrecked, or being ‘crushed alive’ by their student loans, or that surveys show, time and time again, that people with student loan debt report higher anxiety levels, worry more about student debt. than other credit obligations, and are even more likely to suffer from physical ailments such as headaches. It is also likely that people of color, and particularly black women, feel the stress of loans more intensely, given that they carry a heavier debt burden than other groups, even years after obtaining loans. their diploma. structural inequalities.

All this to say that, as Walsemann notes, it is increasingly plausible that “student debt can impact a lot of things in people’s lives that could be of concern to employers.”

Grewal would add that the pain is not short-lived either. Some employees at his client companies have called on IonTuition’s advisors for advice on repayment plans and budgeting over the years and through various phases of life. After all, the estimated average time it takes to eliminate a loan of $ 20,000 to $ 40,000 is two decades, and the average loan is now set at around $ 30,000 per person.

Older workers may also feel the burden

Employers should also take note that it is not just new graduates who are suffering. Walsemann now examines the effects of student debt on parents who have taken out loans to help a child, and how years of heavy debt will be felt by families across generations. For the same reason, Grewal says companies are making the benefits of his company’s student loan available to anyone, regardless of when they graduate.

“You might not be the person with a ton of student loan debt, but if your spouse at home is, or if your child isn’t able to go to college, he would like [because] you can’t fund that, well, it’s not your student loan debt, but it’s still a stressor on you and it keeps on getting you down, ”he says.

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