There’s a new way your job could help if you’re struggling to balance your student loan payments with saving for retirement (and if that’s you, you’re not alone).
It’s the result of the Secure Act 2.0, which was signed into law in 2022. As of January 2024, your employer can contribute directly to your 401(k) retirement plan based on your student loan payments, according to Investopedia.
A new study from the Employee Benefit Research Institute and JP Morgan Asset Management found that making student loan payments negatively affects how much people could contribute to their 401(k).
Student loan payments for many were due in October after payments paused for more than three years because of the pandemic. By mid-November, 60% of the 22 million borrowers with payments due in October had paid, according to the U.S. Department of Education.
The change is supposed to help workers who can’t save for retirement, “because they are overwhelmed with student debt, and thus are missing out on available matching contributions for retirement plans,” according to Section 110.
The study found the help could reduce how much people put into their 401(k) as they wouldn’t be missing out on their employer’s matching contribution.
One more way your work could help with your student loans: direct, tax-free contributions. Through 2025, employers can repay up to $5,250 on employee student loans. The program was put in place first through the 2020 CARES Act.
How do you know if your employer offers this help?
Start by checking any employee portal where you can look at your benefits — it might be under something like financial wellness or fringe benefits.
If you don’t see anything, just reach out to HR or a benefits department. You can ask if it’s something they’re offering. And if not, you can suggest that they do. Business Insider featured a sample email script you could use to ask your employer.
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