A recent survey conducted by Handshake reveals that student loan debt is a major concern for Gen Z individuals entering the workforce. The survey found that 69% of Gen Z respondents believe that their student loan debt will impact the job choices they make. The report highlights the financial strain that these young individuals face, with many expressing pessimism about their career prospects due to the burden of student loans. Furthermore, a significant number of graduating seniors plan to pursue gig work in order to make ends meet. However, amidst this bleak outlook, there is a glimmer of hope as more employers are offering student loan repayment plans as a benefit. The report emphasizes the rise in entry-level jobs that provide repayment programs, suggesting that employers are recognizing the need to alleviate the financial burden of student loans for their employees.
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Headline
69% of Gen Z say student loan debt will impact the jobs they choose
Introduction
In recent news, President Biden’s loan cancellation plan, which would have provided relief to millions of borrowers, was struck down by the Supreme Court. This decision has resulted in further financial strain on Americans, particularly those who are just entering the workforce. A new report from Handshake sheds light on the impact of student loan debt on the job choices of Gen Z, with nearly 70% stating that it will affect the careers they pursue.
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Impact of Student Loan Debt
According to Handshake’s report, over half of the graduating class of 2024 expects to have student loan debt. This significant number highlights the pervasiveness of student loan debt among young adults. Furthermore, nearly 70% of these graduates believe that their student loan debt will impact the job choices they make. This finding underscores the lasting impact that student loan debt can have on the career trajectories of individuals.
Financial security is a top concern for graduating seniors, as revealed by the report. The current economic climate and the burden of student loan debt contribute to a sense of pessimism about career prospects among almost half of graduating seniors. Many feel compelled to rule out certain job opportunities in industries that may not provide adequate compensation to repay their student loans and maintain a suitable standard of living.
Pessimism about Career Prospects
The impact of student loan debt is evident in the pessimism felt by graduating seniors about their career prospects. The fear of not being able to make ends meet due to the financial burden of student loans leads many young adults to believe that their job choices are limited. They may feel compelled to choose higher-paying positions to pay off their debt, which may restrict their ability to pursue careers in industries they are genuinely passionate about.
Certain industries, such as the arts or non-profit sector, that typically offer lower salaries may become unfeasible options for individuals burdened with student loan debt. This limitation further exacerbates the pessimism surrounding career prospects for graduating seniors.
Gig Work as a Solution
The report from Handshake reveals that more than 40% of graduating seniors plan to pursue gig work after graduation. Gig work, which includes freelance or contract jobs, provides a flexible and potentially lucrative way for individuals to mitigate the financial strain of student loan debt. Additionally, 32% of these seniors are open to doing gig work alongside a full-time job, demonstrating their commitment to improving their financial situation.
Financial motivations play a significant role in the decision to pursue gig work. The need to generate income to repay student loans and cover living expenses drives these graduates to seek alternative employment options. The gig economy offers a potential solution to the financial burden of student loan debt by providing opportunities for additional sources of income.
Employers Offering Student Loan Repayment Plans
Interestingly, the report highlights a positive development in the form of an increasing number of employers offering student loan repayment plans. Entry-level jobs with repayment programs have more than doubled since 2019, according to Handshake’s data. In 2019, only 1.2% of jobs on the Handshake platform mentioned repayment programs. This number has now risen to 3%, indicating a growing recognition among employers of the value of offering student loan repayment as a benefit.
The sectors with the highest prevalence of repayment programs are healthcare and services, nonprofit, government, law, and political sectors. These sectors understand the financial burden faced by recent graduates, particularly in fields such as medicine where student loan debt can reach significant levels. Employers in these sectors are actively addressing the issue by providing various forms of assistance programs, including direct payments, access to 401(k) loans, and debt-counseling services.
Debt Burden in Healthcare
The healthcare sector is particularly impacted by student loan debt, with medical professionals often burdened with significant amounts of debt. It is not uncommon for medical school graduates to carry over $200,000 in student loan debt. Consequently, the healthcare sector leads the way in offering repayment options to its employees.
Assistance programs in the healthcare sector come in various forms to accommodate the different financial situations and needs of medical professionals. These programs may include direct payments towards loan balances, access to 401(k) loans for debt repayment, and specialized debt-counseling services. The healthcare sector acknowledges the unique challenges faced by medical professionals and aims to alleviate their financial burden to promote job satisfaction and retention.
Incentive for New Hires
Employers across industries are recognizing the value of student loan repayment as an incentive for new hires. Starting one’s professional life burdened by student loan debt can impact an individual’s financial well-being and overall job satisfaction. Offering repayment programs as part of employee benefits can make these employers more attractive to prospective candidates and increase employee loyalty.
Repayment incentives can take various forms, beyond just direct financial contributions. Some employers provide resources for financial literacy and planning, allowing employees to develop strategies for managing their student loan debt effectively. Others may offer accelerated repayment programs, matching contributions, or even loan forgiveness after a certain period of employment.
Current Student Loan Debt Statistics
The magnitude of the student loan debt crisis is evident in the statistics surrounding borrowing in the current academic year. An estimated $94.7 billion was borrowed by students and parents in the 2021-2022 academic year alone. This staggering amount underscores the widespread and significant impact that student loan debt has on individuals and the overall economy.
Medical professionals are particularly affected by the burden of student loan debt due to the high costs of medical education. It is essential to address the issue of student loan debt and provide viable repayment options to ensure that the healthcare workforce remains stable and motivated.
Conclusion
The report from Handshake provides valuable insights into the impact of student loan debt on the job choices of Gen Z. With nearly 70% of graduating seniors stating that their student loan debt will affect their career paths, it is clear that this issue has significant consequences. However, there is hope in the increasing number of employers offering student loan repayment programs, particularly in sectors such as healthcare. By addressing the financial concerns of graduating seniors, employers can attract and retain talented individuals while also ensuring the well-being and security of their workforce. It is crucial to continue addressing the student loan debt crisis and exploring innovative solutions to support the financial futures of young professionals.