More than 90% of young adults report that financial stress linked to student loan debt is affecting their mental and physical health, according to a survey conducted by Morning Consult for Abbott released Thursday.
The vast majority of young adults polled — 94% — also said they’d be interested in workplace benefits that involve the employer contributing to their 401(k)s while they pay off student loans.
The findings paint a picture of how debt, which at times can seem insurmountable, impacts the health and lives of young adults nationwide.
“Employees with student loans often have to choose between paying their school debt and saving for retirement,” said Mary Moreland, EVP of human resources at Abbott, in a statement. “That’s problematic because people who delay saving for the future will find it hard to catch up.”
Recognizing the issue at hand, Abbott is launching a blueprint to help companies develop programs that can help their employees pay off student loans — based on its own program, Freedom 2 Save.
Back in 2018, Abbott launched Freedom 2 Save — a program that’s meant to guide employees in paying off their student loans at the same time as saving for the future.
The Freedom 2 Save program allows employees who send 2% of their pay toward student loans to receive 5% into their 401(k)s. As of 2022, around 1,900 employees had signed up for the program since its launch.
Younger employees – typically those joining the company in their early 20s — who receive a starting annual salary of $70,000 could ultimately build up to $48,000 in their 401(k) accounts after a decade.
“The good news is that employers can help relieve some of this burden with a program like Freedom 2 Save,” Moreland added.
Now, Abbott has developed a blueprint for other companies to follow suit. The Freedom 2 Save blueprint aims to improve finances as well as overall well-being for employees.
Currently, student debt in the U.S. amounts to $1.57 trillion total, making student loans the third biggest form of consumer debt – just behind mortgages and car loans. Additionally, financial burdens have been linked to worsened mental health, with one 2022 report from LifeWorks finding that American employees’ mental health had declined due to inflation in recent years.
The Morning Consult survey, which examined some 500 young adults aged 18 t0 39, found that 86% of respondents were worried about the resumption of federal student loan payments after a reprieve due to the COVID-19. More than 60% said they did not pay their loans during the three-year emergency pause.
Nearly half of respondents also said the loans affected how they put money aside for their retirement plans, with 86% of that group saying they were cutting down the amount of money they were putting into retirement.
Most respondents said they stopped contributing to retirement completely and 44% said they had already withdrawn funds from their retirement accounts.
