The True Cost of Financial Stress in Healthcare Workforces—and How PSLF Can Help

The Financial Struggles of Healthcare Workers

The escalating cost of higher education has left healthcare professionals burdened with significant student debt. According to the Association of American Medical Colleges (AAMC), the median student loan debt for medical school graduates in 2024 was $205,000, while many nurses, therapists, and other healthcare workers also carry substantial financial burdens. These debts influence career choices, job satisfaction, and, most importantly, employee retention in nonprofit health systems.

Public Service Loan Forgiveness (PSLF) has emerged as a critical tool for reducing financial stress and improving workforce stability in hospitals and health systems. However, many healthcare professionals are either unaware of PSLF benefits or struggle with its complex application process. This lack of access to student loan relief exacerbates financial stress, leading to higher absenteeism, reduced productivity, and increased turnover rates—all of which impact patient care and hospital operations.

The Cost of Financial Stress in Healthcare Workplaces

Financial stress is a hidden disruptor in the healthcare industry, leading to operational inefficiencies and reduced workforce stability. PeopleJoy’s latest white paper, The Impact of Loan Forgiveness on Employee Retention, highlights key statistics that demonstrate how student loan burdens affect hospital staffing:

• Reduced productivity: Healthcare employees struggling with financial stress report lower focus and engagement at work, impacting decision-making and patient care.
• Increased absenteeism: Financially stressed employees are twice as likely to take unplanned leave, adding strain to hospital staff and increasing patient wait times.
• Higher turnover rates: Replacing a single nurse costs between $40,000 and $64,000, while the loss of a physician can exceed $500,000. Hospitals without student loan benefits experience 30% higher vacancy rates compared to those offering PSLF-related assistance.

How PSLF Improves Retention and Workforce Stability

PeopleJoy’s survey of 1,000+ healthcare employees found that PSLF is a major factor in job retention for healthcare professionals, especially mid-career employees with high student loan balances.

• Lower financial stress leads to higher job satisfaction
  
  • 78% of PSLF participants reported lower financial stress, compared to only 52% of non-participants.
• PSLF participants stay longer
  
  • 65% of healthcare workers enrolled in PSLF remained in their roles for at least five years, compared to 43% of non-PSLF participants.
• Hospitals with PSLF benefits attract and retain more talent
  
  • 71% of healthcare employees considering job changes cited student loan assistance as a key factor in their decision.
  • Nurses and staff are the strongest advocates for PSLF, with 49% of frontline workers highlighting PSLF as a critical benefit.

Additionally, PSLF plays a significant role in preventing healthcare workers from leaving for travel nursing or private-sector jobs that offer higher salaries but no loan forgiveness benefits. Survey data showed that:

• 62% of nurses considering travel nursing said PSLF kept them in their current hospital roles.
• 85% of employees with debt between $50,000 and $100,000 prioritized PSLF when selecting an employer.
• 93% of employees with 5+ years of tenure said PSLF increased their likelihood of staying at their current hospital.

The Financial and Operational Benefits of PSLF

Hospitals that promote PSLF as part of their benefits package reduce turnover, improve morale, and ensure workforce stability. A 2023 report by NSI Nursing Solutions found that hospitals offering PSLF assistance saw a 4.1% reduction in RN turnover, helping to bring down the national nurse turnover rate from 18.4% in previous years.

Moreover, 90%+ of employees surveyed by PeopleJoy stated that PSLF encouraged them to remain with their employer, reinforcing its effectiveness as a long-term retention strategy.

Overcoming PSLF Challenges

Despite its benefits, PSLF remains underutilized due to administrative complexities and a lack of awareness. PeopleJoy’s research found that:

• 60% of PSLF applicants struggled with understanding eligibility requirements.
• 47% experienced delays in loan forgiveness processing.

To fully leverage PSLF as a retention tool, hospitals must provide clear guidance and support to help employees navigate the application process. Employer-sponsored PSLF education, student loan counseling, and streamlined certification processes can enhance participation rates and maximize retention benefits.

Conclusion

Financial stress is a major contributor to workforce instability in healthcare, but PSLF offers a proven solution. By integrating PSLF and financial wellness programs into their employee benefits strategy, hospitals can:

• Reduce turnover and absenteeism
• Attract and retain skilled healthcare professionals
• Improve overall job satisfaction and workforce engagement

With rising labor shortages and increasing financial pressures, nonprofit healthcare institutions must prioritize student loan assistance programs to build a more stable, committed workforce—ultimately improving both employee well-being and patient care outcomes.

Learn More

PeopleJoy helps hospitals implement PSLF education, student loan repayment assistance, and advisory coaching to support healthcare employees. Contact us today to explore tailored solutions for your workforce.