From Dow Jones & Company:

The SECURE 2.0 Act, which went into effect Jan. 1, allows borrowers to have their monthly student loan payments matched as contributions to an employer-sponsored retirement plan. This workplace benefit is intended to help over 28 million student loan borrowers who resumed payments last fall after a pandemic forbearance.

Many borrowers have struggled to make monthly student loan payments, with only about 60% of those due in October paid by mid-November. A December study found that two-thirds of borrowers reported having to reduce retirement contributions to pay off loans, creating a major deterrent to saving for retirement.

Student loan matching works similarly to traditional employer matches for retirement plans, with employees having their loan payments counted as contributions. This matching benefit is based on a program from health care tech company Abbott, with a 5% match for employees contributing at least 2% of their salary to student loans. It will be optional for employers to offer this benefit.

A strong demand for student loan matching has emerged, with survey data showing that 90% of employees want programs to help them achieve goals while paying off student debt. Large companies like Chipotle, Verizon and others have already added the benefit, and new platforms are emerging to help HR departments integrate it more easily.

It is expected that industries with more employees holding student loan debt, such as health care, legal and education sectors, will have higher adoption rates. Companies like Abbott have seen a 19% increase in employee retention by offering student loan matching, making it cost-effective for increasing employee loyalty.

While there are other education finance benefits available, including tuition assistance and loan repayment programs, the new student loan matching option could be a game-changer for employees trying to save for the future. Employees are encouraged to speak with their HR departments to advocate for the program and demonstrate the need for the benefit.



Read more: How Student Loan Matching Could Help You Save for Retirement