How Student Loan Debt Affects Employment After College

woman stressed over employment
Topic(s): stress, work-life balance
Publication: Journal of Applied Psychology (2020)
Article: Is Student Loan Debt Good or Bad for Full-Time Employment upon Graduation from College?
Authors: A. Froidevaux, J. Koopmann, M. Wang, P.A. Bamberger
Reviewed by: David Facteau

Student loan debt has become a prevalent issue for U.S. college graduates, as debt volume has increased by 457% from 2003 to 2017 and the majority of graduates now hold debts in excess of $28,000. It is important for both academic institutions and organizations to understand how the financial stress associated with these debts affects attempts to enter the workforce.


Student loan debt may affect undergraduates’ job search efforts in different ways. Researchers (Froidevaux et al., 2020) argue that stress associated with student loans could either be detrimental or beneficial to job search efforts. On one hand, stress regarding student loans may spiral into stress in other domains of life, such as searching for a job. The accumulation of this stress could potentially infringe upon job seekers’ energy, time, and motivation in seeking full-time employment, which in turn may hurt their chances of securing full-time employment.   

On the other hand, the authors suggest that stress associated with student loans may be motivating for some students. Some college students may actively seek out opportunities to earn extra cash to offset expenses by working more hours at a part-time job. The authors argue that there may be benefits to working in college, as past research has suggested that employers may view students who work in college as having additional knowledge and skills that may not be taught in the classroom. In this case, the financial stress that comes from student loans may be beneficial to students, as it may motivate them to engage in behaviors that help their chances of securing full-time employment.

To test both scenarios, the authors surveyed 1,248 graduating seniors from four U.S. universities. Results indicated that the financial stress that comes from student loan debt was related to an increase in stress regarding searching for jobs. This stress in searching for a job reduced the likelihood of securing full-time employment upon graduation from college. Results from the study also suggest that students who were more stressed about their student loans were more likely to work more hours in a part-time job. The increased work hours were related to a greater likelihood of full-time employment upon graduation; however, the findings from the study demonstrate that student loan debt mainly had negative effects on college students’ likelihood of securing a full-time job.


This research suggests that stress from student loan debt primarily has negative consequences on college students’ attempts at finding full-time employment upon graduation. The researchers make several suggestions to those affected. First, students need to take active steps to reduce the stress and pressure that they feel from their student loan debt. Universities often have resources available to students that can help students manage stress and engage in financial planning, such as mental health counseling, financial aid/planning offices, and career-advising offices. Students should be encouraged to take advantage of these resources. Additionally, students may want to consider working throughout the semester or during school breaks, as results from the study suggest a positive relationship between working as a student and securing full-time employment upon graduation.

Organizations can also take steps to help new hires manage their student loans, as the stress of student loans could have lasting impacts after graduation. HR policies, such as student loan assistance, may be an avenue for organizations to consider. The researchers highlighted a recent report indicating that as many as 86% of young workers would commit to their employers for five years if the employer helped them pay off their student loans. Organizations such as Live Nation Entertainment, Aetna, and Nvidea offer some form of coverage to help pay back monthly student loans. Policies such as these could help young workers shave several years off of their student loan payments, and could potentially save them hundreds or thousands of dollars in interest. Organizations can also provide recent college graduates with financial management training as well as training on strategies to reduce financial stress.


Froidevaux, A., Koopmann, J., Wang, M., & Bamberger, P. A. (2020). Is student loan debt good or bad for full-time employment upon graduation from college? Journal of Applied Psychology. Advance online publication.