When Tina Walker decided to invest in her education and pursue several advanced degrees, she knew she was making a choice that would cost her. In order to pay for her continuing education, Walker, now 52, took out several student loans in the early 2010s — and she knows it will take her more years to pay back the almost $160,000 than it did to earn her Ph.D.
Today, Walker serves as vice president of human resources at the non-profit organization California Community Foundation, which works to support and uplift communities within the Los Angeles area. Walker earned her doctorate in organizational leadership in October of 2017, and just three months after graduation, the Department of Education came knocking. It was time to pay up.
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“Sometimes the decision to achieve higher academic goals can be very daunting,” Walker says. “It's not so much Can I do it, but Can I afford it? There's nothing more disheartening, than to not be able to really celebrate that accomplishment because now you have all these extra entanglements.”
Walker isn’t an outlier. Outstanding U.S. student loan debt reached a staggering $1.7 trillion at the end of 2020 according to the Federal Reserve, and there’s no sign this ballooning debt is slowing down. Sixty-five percent of college educated adults have student loan debt, owing an average of $39,351, according to data collected by First Republic Bank.
That burden can have a crushing effect on a person’s mental health, impacting their ability to perform at work or achieve and celebrate major life events — not to mention strain their finances and impact their ability to retire comfortably. Walker admits that she’s had many sleepless nights worrying about her student loan debt.
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“So often in the mental health field we might not think about financial stress, but there’s actually really strong links between financial stress and mental health,” says Myra Altman, a psychologist and the vice president of clinical care at Modern Health. And together, the two can create an endless cycle of worry and stress. “Financial stressors will impact your mental health, and there's an interesting relationship in the opposite direction: When struggling with mental health concerns, finances become harder to manage.”
The financial burden of guilt
Financial insecurity can have a variety of negative effects on mental health, one of them being an abundance of shame and guilt, Altman says. And those feelings can often prevent a person from seeking help.
“If you're more financially unstable, what I've seen very often are feelings of shame and uncertainty,” Altman says. “I should have done things differently, I've made a mistake. That shame comes up a lot, particularly in the context of student loan debt or retirement. There’s a lot of self blame and a lot of anger at the systemic structures that put them in those positions as well.”
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Finances have always been a taboo subject in the workplace, and it isn’t unheard of for some companies to ban employees from talking to one another about their salaries. But employers have an opportunity to change the stigma around discussions of both money and mental health, and to provide employees with education, coaching and benefits that can minimize financial burdens and the cost of care — another prohibitive factor in seeking help.
“Getting care is really expensive, whether that's mental health care or financial support, and more employees are really starting to see that as an important part of the benefits package,” Altman says. “The more employers can do to provide that type of care for their employees at low to no charge can help alleviate a lot of the stress and take away some of the barriers of actually really focusing on [self-care].”
Employers have a responsibility to help
It is critical for employers to recognize when employees are struggling and provide support and resources to help them improve their financial wellness and overall mental health. The two are inextricably linked, and employers can’t expect their employees to bring their full selves to work and be productive when they are struggling to pay the rent or buy groceries.
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Walker knows this all too well, and now that she’s in a leadership role within California Community Foundation, she’s working to create better support for team members who may be struggling.
“My role is to oversee all things people-related,” Walker says. “I sit in a very important seat because I personally have traveled this journey.”
That’s why she urged the leaders at CCF to partner with Goodly, a student loan benefits provider that allows employers to make direct payments to their employees’ loans.
“It was easy for me to present this option to CCF, and I was very excited when our management and executive teams said yes,” Walker says. “And they said yes at one of the higher levels of contributions that they were willing to contribute for staff.”
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For businesses to offer student loan assistance is a “no brainer,” says Greg Poulin, CEO of Goodly. Benefits like this, he says, can reduce employee turnover, reduce absenteeism, improve productivity and thus positively impact the company’s bottom line.
On a more human level, benefits like this give people back their lives, so they can make plans for the future.
“You can't put your life on hold, you can’t say I’ll suffer today and enjoy it later,” says Scott Thompson, CEO of student loan benefit provider Tuition.io, which helps employers make contributions toward employee loans. “We bump into this a lot.”
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Trilogy Health, a long-term care provider, offers the Tuition.io benefit to its employees. The employer saw how this debt was impacting its workers financially and mentally, as well as affecting how well they did their jobs. Once employees started to utilize the benefit, Trilogy Health’s retention levels increased and employees became happier, says Todd Schmiedeler, chief engagement and innovations officer.
“We heard stories from employees [saying] ‘student loan debt is keeping me from buying a house,’ and ‘I don't feel comfortable asking my girlfriend to marry me because I've got all this student loan debt,’” Schmiedeler says. “That's the thing about student loans, we don't think about it that way, we tend to think it's just a money thing. But it’s not. It’s a hope thing.”
Impacting retirement
When Thompson starts working with a new employer to offer Tuition.io benefits, he says he’ll first ask them about the level of participation in the company’s retirement plan — and it isn’t unusual for employers to express frustration when confronted with this question. Because of their higher levels of student loan debt, employees often forgo planning for retirement in an effort to make ends meet.
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“Folks that have an ability to control the short-term, it really makes them significantly more willing to invest in the long-term,” says Jeff Cimini, senior vice president of retirement product management at Voya Financial.
Voya works with a company called Vault in order to offer services to plan sponsors who have their retirement plan with Voya. Through Vault employees will be able to access counseling and other financial support services to get them on track for a secure today and a secure retirement.
“With that assistance and that help, we’re finding that folks are much more comfortable,” Cimini says. “We see higher productivity at work, but also we're noticing that it's really having a positive impact on their retirement behavior as well.”
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Ninety-six percent of individuals with student loan debt would be likely or very likely to save more for retirement if they felt like they had their student debt under control, according to research by Voya. Additionally, seven in 10 employees agree that they need their employer’s help to ensure they are healthy and financially secure, while six in 10 employees say it is their employer’s responsibility to extend that help.
“What we saw in the last year with COVID and those high unemployment rates was that many folks did not have emergency savings funds set aside, and therefore they really weren't that financially secure, but were highly dependent on their job for everything day-to-day,” Cimini says. “When [their work] was either temporarily or permanently put on pause, the only backdrop [employees] believed they had was their retirement account. We saw a significant rise in hardship withdrawals.”
There is a misguided notion among student loan borrowers that they need to get their debt taken care of first and then they can think about retirement, but as Walker can attest to, life doesn’t work that way. When the Department of Education came to collect their payments, Walker was juggling care-giving bills for her grandmother who had recently passed, the costs associated with raising her son and everyday bills.
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“You start to make very deliberate decisions about your funding and your spending because you need to make every dollar count,” Walker says . “You don't take lavish trips, you learn to enjoy a staycation, you learn to find the beauty in a trip to the beach or a trip to the park.”
But those sacrifices don’t always reap rewards. Walker, who prioritized saving for retirement even while she was in school, is now dealing with student loans large enough to keep her in the workforce for an extended period of time. She’s looking forward to retiring, likely at the age of 72, with some confidence and security — though tuition benefits may have helped her find an easier road forward.
“What I have done over time is adjust my contributions based on my financial needs,” Walker says. “I don't always hit my targeted contribution goal, and now that I have loan repayment, I don't put as much into my retirement plan, but I still contribute. Retirement is not something that you want to play catch up with.”
