State and local governments are grappling with an unprecedented workforce challenge as 10,000 Baby Boomers retire every day, leaving an increasing number of open roles that need to be filled. Making matters worse, many government employers are steadily losing college-educated talent to higher-paying opportunities in the private sector.
Years of financial strain for employees due to inflation and higher living costs have only exacerbated the issue. And since federal student loan payments resumed in 2023 and penalties returned in October 2024, employees now face increasing financial pressures, further hurting recruiting and retention efforts within HR.
Those who are most at risk are the ones just starting out their careers. 70% of recent college graduates have student debt at an average of nearly $40,000 per person. The debt levels are 2-3x higher among those working in specialized roles that require advanced, post-secondary degrees.
In this tightened labor market, offering higher wages is a major hurdle for many public sector employers.
Thankfully, however, meaningful benefits like Public Service Loan Forgiveness (PSLF) can significantly enhance government compensation packages, giving employers a powerful tool to attract and retain top talent while helping employees achieve financial stability. The key is making sure the program has high visibility among new recruits and employees, and that employers are effectively integrating it into their HR processes so that it is managed quickly and effectively for all parties.
Why PSLF is a Critical and Timely Tool to Solve This Challenge
Federal student loan payments resumed last year, and for many, the financial impact is substantial. The average federal student loan debt is $37,853 per borrower with average payments around $299 per month. For public sector employees—who often have lower salaries compared to comparable roles in the private sector—this creates a significant financial burden.
PSLF offers a clear path to achieve financial relief. Established by Congress, the program allows employees to have their remaining federal loan balance forgiven tax-free after making 120 qualifying monthly payments (i.e. 10 years) while working full-time for a government employer. This unique benefit is one the private sector simply can’t match, leveling the compensation playing field and making it an invaluable resource for government employers to bolster recruitment and retention efforts.
How to Help Employees Access PSLF
Navigating PSLF requirements can be confusing for borrowers. That’s where government employers can step in, offering a digital student loan solution to guide employees through the process. These solutions help employees:
- Enroll in income-driven repayment (IDR) plans: IDR plans cap monthly payments based on income, easing financial strain.
- Track progress toward forgiveness: Qualifying payments made under IDR plans count toward PSLF, bringing employees closer to financial freedom.
By simplifying the process and ensuring employees are set up for success, you can offer a benefit that alleviates stress and enhances job satisfaction.
Partnering for Success
While PSLF is a game-changer, its complexity has historically led to confusion and frustration. In fact, until recent reforms, 98% of PSLF applications were denied due to missteps in meeting requirements. A digital student loan solution, coupled with student loan expertise to weed out common errors, eliminates this burden by providing:
- Streamlined enrollment in IDR plans and PSLF tracking.
- Automated employment certification to reduce HR workload.
- Expert support with certified student loan experts for employees navigating complex policies.
For government HR teams, this means offering a high-impact benefit without getting bogged down in administrative tasks and time-consuming employee management concents. Instead, your team can focus on other priorities while still delivering a transformative benefit to employees.
Did you know? Government organizations participating in Sourcewell can access streamlined and competitive contracting with Summer. Learn more about our awarded Sourcewell contract here.
A Timely, High-Impact Solution
Government employers are in a unique position to support their workforce with meaningful benefits that reduce financial stress. Compensation and purpose are the top two reasons employees stay in public sector roles, according to a McKinsey survey. By helping employees reach loan forgiveness, you’re not just offering financial relief—you’re empowering them to focus on the impactful work they do every day.
At Summer, we partner with over 100 public sector organizations—including the American Federal of Teachers, the City of Alexandria, the City of Akron, and soon the largest city in the U.S.—to bring employees closer to debt-free futures. Our turnkey digital student loan solution has delivered over $1.7B in total projected forgiveness.
If your organization is looking to attract and retain talent while supporting employees’ financial well-being, we’d love to help. Schedule a call or demo today to explore how Summer can implement a PSLF benefit for your team.
