New York, NY – Employers in the United States are hesitant to offer a new perk that would help workers pay down student loans while saving for retirement, despite a law that makes it easier for companies to do so, experts say. The SECURE Act 2.0 Act, which became law in December 2022, included a provision allowing employers to count student loan payments toward matching 401(k) or other retirement contributions for the first time this year. The aim is to help Americans avoid the difficult choice of using their money to repay student loans or save for retirement.
However, companies are not rushing to offer this benefit amid lingering economic worries, such as the chance of a slowdown, which could thwart those plans. According to experts, nearly two-thirds of companies surveyed said they won’t offer student loan matching, with only 5% implementing it or planning to do so this year. Reasons cited for not offering this benefit range from cost and complexity to competing priorities, lack of interest, or necessity.
“Compensation teams across the corporate world are laser-focused right now on cost control, so I suspect that many will be reluctant to consider expanding their benefit offerings,” said Aaron Terrazas, chief economist at job site Glassdoor. On the other hand, certain industries, such as health care and professional services, may be quicker to adopt this new benefit in order to attract and retain talent.
When an employee makes a student loan payment, the company would contribute to their 401(k), 403(b), or other qualifying retirement accounts, with the exact match structure depending on company policy. The matching percentage, eligibility, and vesting rules are also the same as those for the 401(k)-match benefit. As of now, approximately 34% of employers offer some form of student loan repayment benefits, up from 17% in 2021. Some companies also provide student loan payment counseling and third-party, low-interest or interest-free educational loans, along with debt consolidation and refinancing services.
As of now, around 45 million Americans collectively owe $1.75 trillion in student loans, and of the 22 million borrowers with payments due after the student loan payment pause ended, 60% missed their payments. Despite the hesitation among companies, experts expect more to consider offering this benefit in the coming year.