Student Loan Stress Linked to Reduced Productivity, Higher Turnover, and Stalled Retirement

New Tuition.io survey data finds that education-related financial stress is affecting employee engagement, career decisions and retirement readiness across generations and education levels, with broad implications for workforce stability. 

CONTEXT FOR THIS RESEARCH

New policy changes are expected to increase financial strain for millions of student loan borrowers already struggling with repayment. Last December, the Department of Education announced plans to resume administrative wage garnishment (AWG) for defaulted federal student loan borrowers in July 2026, allowing the government to seize up to 15% of a borrower’s disposable income without a court order. With more than 5 million borrowers in default and another 4 million in late-stage delinquency, the policy shift could significantly reduce take-home pay for a large segment of the workforce.

Additional policy changes in the One Big Beautiful Bill Act will further restrict repayment affordability for student loan borrowers by phasing out the most cost-effective income-driven repayment plans. At the same time, new annual borrowing caps and the elimination of the Grad PLUS loan program will limit funding options for professions requiring advanced degrees. Together, these changes drive up the cost to repay student loans, compounding the financial strain already intensified by surging prices for essentials like housing, gas, and utilities.

To better understand how education-related financial stress is affecting the workforce, Tuition.io commissioned a national survey conducted by Dynata in December 2025.

About the Survey: The survey sampled 1,000 U.S. adults aged 21 and older across a range of education levels, income brackets and age groups. It explored how student loan debt and education-related financial stress carry into the workplace, influencing productivity, retention and long-term financial planning.

KEY FINDINGS

Financial Stress Undermines Focus and Engagement at Work

Financial stress from student loan debt directly impacts employee performance and motivation levels. Younger employees report the highest levels of financial strain, while employees with advanced degrees carry the largest student loan balances.

Nearly three-quarters of employees (72%) say financial stress affects their ability to focus at work

• Student loan related financial stress affects workplace focus for 84% of Gen Z employees and 76% of Millennial employees

• Nearly half (45%) of full-time employees experience financial stress often or very often

More than a quarter (26%) of employees think about financial stress from student loan payments daily or weekly, including:

• 40% of Gen Z employees

• 30% of Millennial employees

• 30% of full-time employees overall
  

Employees across higher education levels carry significant student loan balances

• 28% of employed bachelor’s degree holders carry more than $25,000 in total student loan debt

• 30% of employed master’s degree holders have more than $50,000 in total student loan debt

• 33% of employed PhD holders currently have more than $100,000 in total student loan debt
  

Student Loan Debt Reshapes Long-Term Financial Security

For most degree holders, debt actively prevents them from building the financial foundation they need for retirement, a problem that spans generations and education levels.

Roughly 20% of employed U.S. adults say they cannot afford to contribute to a retirement plan

• Among employees with student loan debt, around 87% of Millenials and Gen Zs say their debt impacts their ability to save for retirement

• Nearly 40% of all full-time employees state that student loan debt impacts their ability to save
• 63% of all doctoral degree holders, 43% of master’s degree holders and 33% of bachelor’s degree holders say their debt affects their retirement savings
• Across all age groups and education levels, only 21% of all employees are maxing out contributions to their retirement plans
• 20% of employees making less than $75k per year aren’t able to save for retirement

For the 45% of the workforce carrying $10k+ in student debt, retirement readiness is under threat:

• 50% of employees with student loans report that debt either prevents them from saving for retirement entirely (19%) or significantly affects their ability to save
• Among all employees earning under $50k, student debt prevents or significantly affects saving for 42% of the workforce
• For those earning under $50k with student loans, that impact jumps to 63%, warning that a secure retirement may be out of reach

Education Benefits Influence Retention and Motivation

Survey data points to a clear opportunity for employers to improve retention and motivation through education benefits. These benefits are especially influential for younger and highly educated employees — two groups employers compete hardest to attract and retain.

• Nearly 60% of full-time employees say they would be more likely to stay with their employer if they were offered student loan repayment support

• Among employees with outstanding student loan balances:

  • 80% of full-time employees say loan repayment assistance from their employer would increase their motivation at work

  • 68% of part-time employees report the same

• 78% of employed doctoral degree holders say student loan support would make them more motivated at work, rising to 100% among those who actually carry student loan debt

• 74% of Gen Z and 70% of Millennial employees would be more likely to stay with an employer that offers support with student loan payments

• Even at the $200k+ income level, education benefits drive retention, with 60% of high earners citing them as a key motivator to remain with their employer

Knowledge and Cost Barriers Limit the Impact of Tuition Assistance

Many employers are already investing in education benefits, but reimbursement models and communication gaps often prevent employees from using them.

• 76% of employees interested in upskilling say they’d be more likely to use tuition assistance if costs were fully covered upfront, with Gen Z and Millennial employees showing the strongest interest (83%)

• 57% of high school-educated employees, 44% of associate degree holders, and 39% bachelor’s degree holders are unsure whether their employer offers tuition assistance, or don’t understand how it works

• Roughly 1 in 3 (31%) professional and master’s degree holders, and 22% of doctoral degree holders report a similar awareness gap

• Overall, 42% of full-time employees across all age and education levels are unsure whether their employer offers tuition assistance or how the benefit works

Tuition.io is the leading employer-sponsored financial wellness platform specializing in student loan benefits and tuition assistance administration. We help employers hire, retain, and upskill talent by addressing the dual challenges of historic student debt and the ROI of higher education.

Our Industry Briefings are intended to help employers, benefit brokers and advisors, record keepers, and other workforce professionals be informed about trends in the dynamic areas of student loan debt, higher education, and their impact on the U.S. workforce. Visit Tuition.io and subscribe.