How Student Loans Impact the Business World

There has been a large amount of attention paid to student loans recently. This is because the cost of higher education is far outpacing the rate of inflation. Decades ago, it was possible for someone to work part-time while going to school in an effort to pay their tuition. Now, this is virtually impossible. Students regularly pay more than $30,000 per year to go to school at an in-state college while they might pay twice that to go to a private school. While an education used to be viewed as something that was considered priceless, this is no longer the case. When students realize that they owe more than a quarter of a million dollars in student loans, they quickly start to question whether this is worth it. This places a lot of pressure on students to go into fields with higher salaries instead of simply pursuing what they love. This is impacting the business world as well.

One of the biggest impacts this has on the business world is the rate of employee turnover. Businesses and students both value loyalty; however, students are under a tremendous amount of pressure to pay their loans back. As a result, when students get that first job out of college, they almost immediately start looking for better opportunities even if they only pay a fraction more than their current job. This leads to higher rates of turnover, causing businesses to have to sink countless dollars into training new employees on a regular basis. This impacts both productivity and revenue.

Therefore, businesses have to find new and creative ways to keep employees around. This has led to many businesses offering an incentive known as student loan repayment. In essence, businesses are saying that they are willing to help students pay back their loans if they are willing to stick around for a certain amount of time. Of course, money is money and businesses simply end up paying more for employees to keep them around. This drives up the overhead costs of businesses, adding to their expenses.

All of this serves to highlight the point that student loans impact not only the student but also his or her potential employer down the road. Therefore, something needs to be done to get the cost of higher education in this country under control. This simply is not sustainable and it is unfair to saddle young professionals with such a tremendous amount of debt. This is having a profoundly negative impact on this country’s small businesses.


Alex is a small business blogger with a focus on entrepreneurship and growth. With over 5 years of experience covering the startup and small business landscape, Alex has a reputation for being a knowledgeable, approachable and entrepreneurial-minded blogger. He has a keen understanding of the challenges and opportunities facing small business owners, and is able to provide actionable advice and strategies for success. Alex has interviewed successful entrepreneurs, and covered major small business events such as the Small Business Expo and the Inc. 500|5000 conference. He is also a successful entrepreneur himself, having started and grown several small businesses in different industries.