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The public and nonprofit sectors generally pay less than the private sector, and individuals are willing to forgo higher salaries in exchange for greater intrinsic satisfaction derived from making a contribution to society. However, personal financial considerations, such as education debt, may discourage individuals from pursuing careers in lower paying sectors even if they are predisposed to public service motivation (PSM). We surveyed a sample of graduating students to investigate if (a) education debt discourages students from pursuing lower paying public or nonprofit careers and (b) whether PSM overrides the considerations students might make about entering lower paying sectors as their education debt rises. First, we find that education debt has a marginal effect on initially selecting private over public and nonprofit careers. Rising education debt may discourage students from public sector careers after controlling for PSM. We also find that rising education debt may discourage students from nonprofit careers even with high levels of PSM. The present study enhances our understanding of how financial considerations, in the form of education debt, may influence a student’s initial choice in pursuing public, private, and nonprofit careers.


Nonprofit and Voluntary Sector Quarterly

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Managing for Sustainability

Publisher Statement

© Eddy Ng, CC BY-NC 4.0

Author's Accepted manuscript

First published in Nonprofit and Voluntary Sector Quarterly in 2019.