With 20 Million Borrowers Resuming Student Loan Payments on October 1, Data from Fidelity® Reveals Health Care Workers Carry the Most Debt

With the student debt on-ramp transition period coming to an end on September 30[1], more than 20 million U.S. borrowers will now need to resume payments, marking a closure to the post-pandemic measures designed to give student loan holders some leeway as they worked that cost back into their monthly budgets. This is a critical time for the nearly 50% of Americans who haven’t yet resumed payments following the sunsetting of forbearance in October 2023[2]. Those borrowers will not only be responsible for missed, late, or partial payments that could impact their credit score, but will also need to account for the interest that accrued over the past year.

Who might be most impacted by this change? Fidelity Investments^® analyzed data from its Student Debt Tool[3] to see which industries and generations are carrying the largest burden.

“Student debt is a reality for millions of Americans, and Fidelity data continues to show there’s no ‘one size fits all’ definition of who is carrying that burden,” said Jesse Moore, senior vice president, head of Student Debt at Fidelity Investments. “With millions of borrowers now needing to fit student loan payments back into their monthly budgets, it’s more important than ever for employers to consider how they can help their workforce tackle their student debt. Fidelity is committed to providing a range of resources designed to help borrowers pay down their debt while still working toward their long-term financial goals.”

As in past years, Student Debt Tool users in the health care industry continue to report holding the most debt and pay the most per month on average – $74,749 and $837, respectively. The health care industry also has the highest percentage of employees carrying debt, followed by the finance and insurance sector.

While national averages show borrowers in the 35–49-year-old group carrying the largest burden, Fidelity Student Debt Tool users in the Boomer generation carry the highest loan balance and pay the most per month on average, likely driven by loans they are carrying on behalf of their children.[5] Even still, the majority of Fidelity’s Student Debt Tool users are Millennials, who pay just under $600 per month on average. These averages are higher than those reported by the Department of Education across all generations, suggesting Student Debt Tool users generally carry a higher balance and are looking for options to better manage their debt.

Unfortunately, Fidelity data reveals carrying a student debt balance can have a negative impact on saving for retirement. More than 15% of Student Debt Tool users report having an outstanding loan against their 401(k), which can impact their ability to save for the future. In fact, nearly a quarter (24%) of users contribute less than 5% of their paycheck to retirement. This is particularly troublesome for younger borrowers who won’t be able to capitalize on the long time horizon they have when they start saving at an earlier age.

Providing Solutions for Employers and Employees Through Fidelity’s Student Debt Program      

With millions of borrowers fully resuming their monthly student loan payments, student debt repayment benefits can be a great option for employers who want to help ease the ever-growing financial burden on borrowers. Fidelity research shows offering student debt assistance can boost employee retention and can also be a powerful recruiting tool. In fact, data from Fidelity's College Savings + Student Debt study reveals more than 8-in-10 who have or expect to take out student loans say they'd be more likely to apply for a job that provided a student debt benefit. Fidelity’s Student Debt Program offers an end-to-end solution for employers who want to offer such a benefit to their employees:   

• With Student Debt Direct, employers can make payments directly to employees’ student loan service providers, saving employees precious time and money. In fact, Fidelity data shows participants in the program have the potential to reduce their loan payoff time by more than three and a half years.[6] Through this offering, Fidelity has helped employers make almost two million payments totaling nearly $400 million toward paying down student debt for their employees. 
• With the passing of SECURE 2.0, borrowers no longer have to choose between paying off their debt or saving for retirement. Fidelity’s Student Debt Retirement product allows employees to earn employer contributions to their retirement accounts by paying off their loans. Enrolled participants are expected to have nearly two times the balance in their 401(k) plan by retirement compared to those who aren’t enrolled.[7]

Fidelity customers can also use the Student Debt Tool to secure a complete, easy view of their loans; model different scenarios to see how they can improve their loan; and tackle their balance while feeling more in control. For those still in the planning stage, Fidelity’s College Savings Calculator can provide a gut check on whether they are on track to meet their college savings goals.

Fidelity Investments and Fidelity are registered service marks of FMR LLC.

The Student Debt Contribution Benefit is not a product or service of Fidelity Brokerage Services.

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