Debt vs. Service: The Dilemma of America’s Essential Workers

Public service workers are the backbone of our communities, yet many feel they’re getting the short end of the stick. With rising turnover rates and greater demand from the public, we’re headed toward a public service shortage - one where everyone loses.

To further understand what’s really impacting those in public service, I talked to a number of public service workers to see how student loan debt is impacting their lives, and in some cases, leading them to quit.

A Public Service Work Shortage

There are an estimated 9 million public service workers in the United States doing critical roles. Many of these workers are fed up with low pay and high expectations. This poses a problem for the future of the sector as the number of workers cannot keep up with the needs of the public.

The issue is twofold: not enough recent graduates are entering public service work and too many current workers are leaving. Because a majority of public service workers choose to leave their jobs due to lack of compensation and unrealistic workloads (which was the case for myself and several people I talked to), the future of the sector rests on retention and attracting new graduates.

The Toll of Student Loans

One of the biggest financial issues public service workers face is student loan debt. The average graduate’s federal student loan debt in 2024 is $37,853, and it can take decades to pay off. Every person I spoke to said student loan debt had a negative impact on their lives, often forcing them to push back personal milestones such as homeownership and parenthood.

Student loan debt is an especially significant burden for women, people of color, immigrants, and first-generation college students. Losing these workers to the higher-paying private sector means less diversity and fewer inclusive viewpoints within the public sector, ultimately hurting how the public is served.

With the rising cost of higher education, student loan debt both prevents new workers from entering public service roles and pushes current workers out. Though a federal repayment program exists for these workers, they’re not viable options for many. Employers are going to have to step in if they want to keep their workforce.

The Public Service Loan Forgiveness Let-Down

The Public Service Loan Forgiveness (PSLF) program is available to public service workers with student loan debt. It’s meant to let public service workers make monthly minimum payments on their federal loans for ten years, after which the rest of the balance is forgiven.

Since it takes most borrowers over twenty years to pay off their federal loans, PSLF could save public service workers thousands of dollars and years of payments - when it works.

Though seen as a way to attract and retain public service workers, especially in the nonprofit sector, PSLF has failed to live up to its promise.

A study by the Student Borrower Protection Center found that very few eligible workers are reaping the benefits of the program. The issue appears twofold:

1. Public service workers are unaware or feel discouraged about their ability to be accepted into PSLF - causing just 15% of eligible workers to file for the program.
2. PSLF has only accepted 2.3% of applicants, meaning even eligible workers are unlikely to get in.

Less than half a percent (0.3%) of eligible workers have been accepted into the program since November 2020 - arguably one of the most crucial times for financial relief after the strain on public service workers throughout the COVID-19 pandemic. Though PSLF seems promising, it’s not currently an accessible option for most.

For more information on how PSLF works, see our article, Navigating Public Service Loan Forgiveness.

An Employer Student Loan Repayment Solution

PSLF is not reaching many public service workers, making it more important than ever to take steps to understand and initiate changes that will attract and retain the workforce.

According to Handshake’s Class of 2024 survey, student loan assistance is emerging as a standout employer benefit, especially since nearly 70% of graduates report debt will influence their job consideration. With a staggering 86% of employees saying they’d commit to a company for at least five years if the employer helped pay back their student loans, providing an employer student loan repayment benefit could be the answer to the public sector’s retention problem.

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.

Download Free Handout

Debt vs. Service: A Series

Over the last several weeks, I’ve spoken to public service workers about how student loan debt is affecting them. What I found was pretty consistent: public service workers are feeling undervalued, overworked, and unfairly paid. A big part of that is the fact that many of them are still paying off the education it took to qualify them for public service.

Throughout Debt vs. Service, I explore the ways in which student debt has shaped the lives of real individuals who’ve dedicated themselves to public service work. I talked to educators, healthcare workers, and nonprofit staff - fields vital to the nation that don’t typically see the pay or benefits of federal government positions.

Our first stop? How student loan debt is costing us teachers