Debt vs. Service: The Healthcare Worker Tradeoff

In the previous article of Debt vs. Service, we looked at how student loan debt is affecting the nation's educators. This time, I spoke to healthcare workers - individuals dedicated to supporting public wellness. Many of them graduate with a staggering amount of student debt, forcing these workers to balance the demands of a new career under financial strain, often at the expense of their home lives. An unsettling number of healthcare workers are living paycheck-to-paycheck, pushing them out of the field - and a worker shortage means patients suffer.

Student debt is hurting healthcare workers

Educational indebtedness is more frequent among healthcare workers than any other profession, according to the American Medical Association. 70% of medical students take out loans to afford their education, the average individual balance often exceeding $200k.

Nearly every public service worker I talked to relayed that taking out loans felt like an expected and natural course of action, though they really didn't understand what they were getting into. "I was a kid when I took on these loans. I just had no idea," said Hana, a former children's hospital music therapist. "Students just don't have any concept of how much debt it actually is and how it affects you as soon as you get out of school. They're often just thinking, 'Oh, but when I get my degree, I'm going to be good. I'll have a career and I can pay for it all at that point,' you know? And it's not that clean. It's not always that easy."

After graduation, the price of schooling is rarely offset by the starting pay for many positions in healthcare. Erin, a physical therapist, told me, "New grads start at $67k in this setting, which is hard to stomach when you have a doctorate." With upwards of $180k in loan debt, the starting salary didn't make a dent in what she owed.

Both Hana and Erin said student loan debt payments have often taken up a large chunk of their expenses. "I've had to factor in that expense of my life, having to pay these bills every month. I've had to factor it in all the time, for every decision," said Hana. "It's just been in the background for so long. I forget sometimes how much I was shaping my life around this limitation." For many, the higher salary promised by their education is overshadowed by considerable debt.

Working in healthcare has unexpected costs

Student loan debt is never just about paying off the amount borrowed. There's interest on those loans, which is currently the highest it's been since the Great Recession. And of course, there are the personal sacrifices made to get payments in on time. Due to high interest rates, borrowers are paying more and for longer, which often means postponing personal goals or taking on a second job.

All of this creates a ripple effect of financial strain, one that follows borrowers throughout their lives. As WGU Labs explained: "Although student loans are meant to help individuals afford college, in reality they can become a lifelong anchor that weighs borrowers down with decades-long payments that limit their opportunity to reap the financial security their degree should offer."

High loan payments strain day-to-day life

On top of loan payments, many healthcare workers find they need to pay out of pocket to maintain their careers. The financial burden of paying for certifications, continuing education, and supplies or uniforms was a common grievance among public service workers I talked to.

"I was very frustrated about the fees I still had to pay," said Hana. "There are fees every year for recertification. And your association - there's a membership for that too. Plus registration to go to their conferences, that's another fee. Traveling to conferences, having to pay for lodging there. It felt like I was being stripped out of all my money." She told me that at the beginning of her career, these fees were especially stressful. "I had just gotten out of my internship. I had no money, you know? I was being paid very little. The loans were just the cherry on the top of everything."

Healthcare workers are struggling day-to-day to make ends meet. This is in part caused by high student loan payments necessary to paying off the cost of medical schooling. "In total, I pay $1,600/month for my student loans, which is essentially another mortgage," wrote Erin, who is both a parent and homeowner. "I also have always had a side job to make extra money, so that I can afford my loan, mortgage, and child care. I work full time at the hospital, and another 5-10 hours doing home visits." Nearly one in five healthcare workers have side jobs to supplement their income. For nurses, that number is closer to 50%.

Student debt pushes back major financial milestones

The consequences of student loan debt are far-reaching and linger long after graduation. Every public service worker I spoke to said student loan debt has affected financial milestones in their lives. As Tanti put it, "It has affected any major 'adult' decision I plan on making. Moving out, buying a car, going back to school, etc. I now have to consider if I can afford these things alongside my student loans."

Going back to school was a common desire for many I spoke to, but like Hana, student loans are holding them back. "I would love to go to school again," she told me, "but I just don't think it's in the cards for me because I don't want to pay those loans. I don't think I want to with how much it costs." According to Pew Research Center, only 22% of adults in the U.S. believe going to college is worth taking out loans.

Loan payments also prevented another public service worker I spoke to from seeking further education. "When I was about to graduate from my undergraduate program, I wanted to get my masters, but I didn't want to take out more loans. I was trying to find a job that had a tuition repayment plan or tuition coverage and I wasn't able to find one, so I didn't end up going." Smiling, they said, "You know, if I had an employer that paid for my tuition, I would go back to school in a heartbeat."

A healthcare shortage means patients suffer

There has been a significant increase in turnover throughout the public service sector since the COVID-19 pandemic began, but it's especially devastating in healthcare. According to a study by Mercer, the work experience in healthcare is rated as "one of the worst across industries," with 50% of workers reporting that they feel "overworked to the extent they are looking to change jobs or planning early retirement."

This poses a real problem for the public as workforce turnover in healthcare results in substantial costs for both patients and organizations. A major shortage in key allied health positions is projected within the next 12 years, the most dramatic shortages in physicians, nurses, healthcare educators, and midwives. As it is, supply is not projected to keep up with the demands of the public: only 78% of primary care needs are estimated to be met in 2036.

But shortages are not the only issue - healthcare worker morale is a key component to keeping the nation healthy. The American Medical Association warns that staff dissatisfaction has "unfavorable implications for patient care even without staffing shortages."

Employers are not meeting the financial needs of healthcare workers

A Mercer survey found that a majority of the top unmet needs of healthcare workers are financial in nature, including the ability to cover monthly expenses and pay off personal debt. "Student loan debt is debilitating if you're not making a lot of money," said Hana, who has been paying off her loans for the last decade. "A good amount of my expenses were my student loan payments."

Only 52% of healthcare workers believe they're paid fairly, one of the lowest scores of any industry according to a Qualtrics report. Though the median salary for healthcare workers is above the national average at $80k according to the Bureau of Labor Statistics, 66% of healthcare workers are living paycheck-to-paycheck and 44% say it's a financial hardship to afford their own medical care.

A key reason for this is student loan debt, which nearly 70% of healthcare workers have to pay off. Though the average individual loan for healthcare workers is around $200k, graduates often pay $300k over the life of their loans due to interest charges, which means some student borrowers will pay upwards of $100k in interest alone. "I am concerned about the hefty interest rate that my private student loans have," said Tanti, who graduated earlier this year. "I fear that it may make paying them off impossible."

"Debt is not a state of being we should be okay being in," stated Hana, who left the healthcare field in late-2020 to become a piano teacher, a career move that actually allowed her to start chipping away at her loans. And though finances were not the only thing driving her from her role as a music therapist, Hana is much happier and in a better financial situation now that she's left.

Many are not far behind. 46% of healthcare workers say they're likely to leave their current job in the next 12 months due to lack of compensation. With shortages already within the medical field, the public cannot afford to lose any more.

Increase compensation to support the workforce

"While passion is a key factor for many in the healthcare industry, it's not sustainable on its own," stated a report by Everee. "Fair compensation is crucial to shaping worker satisfaction." With financial strain weighing most heavily on healthcare workers, it's time employers start meeting their needs.

Healthcare workers need financial assistance

The financial burden on healthcare workers is steep, and after a physically and emotionally draining workday, it's easy to start questioning whether passion is worth the personal cost. "It's like you have to take care of yourself," one former healthcare worker told me. They shared how disheartening it was to give so much to an employer that was giving back so little. "I don't remember them paying for anything."

Some hospitals do help cover continuing education costs and even contribute toward employee student loans, but actually seeing this benefit can be difficult. There may be a minimum number of years of employment before healthcare workers are eligible, and in some cases, they only help with certain types of loans. Erin wrote, "The help with student loans is very new here. My hospital pays $10k a year to help me pay off my private loan, but nothing toward federal."

Employer student loan assistance can be life-changing

Providing student loan assistance could alter the trajectory of the healthcare shortage, attracting and retaining vital care workers. 86% of employees say they'd stay with an employer for at least 5 years if that employer contributed to paying off loan debt. A recent graduate told me student loan repayment programs played a key role in them accepting a job offer.

For Tanti, Though she doesn't yet qualify for the student loan repayment benefit through her hospital, she looks forward to it. "An employer paying off my student loans would significantly lift some of the burdens I have and improve my mental health. All of my life, I have not always had even the bare minimum of what I need to thrive, and having this heavy monthly bill feels like I'm being punished for doing something to positively change my life. Having help paying off my loans will allow me to save more, invest in my future, and go back to school."

Offering a student loan repayment benefit is an easy way to take financial strain off the shoulders of healthcare workers. Services like Paidly make setting up this benefit easy.

Employee student loan assistance services

Easily offer student loan repayment benefits. Download our free guide or visit our employer benefit page to learn how to relieve employee financial stress.

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So far we've covered education and healthcare. In our last deep dive, we'll look at how student loan debt is impacting nonprofit staff.

Thank you to everyone who generously shared their experiences with me. Quotes were lightly edited for clarity and names of interviewees were included in this article with permission.