November 2023

FINANCIAL WELLNESS

Employers ready to help as student loan payments resume

Student loans are a significant part of U.S. household debt—currently higher than outstanding credit card debt and comparable to the amount of outstanding auto loans. In fact, student loans amount to $1.57 trillion of debt nationally, according to the latest federal estimates.¹ While federal student loan repayments were paused to offer relief to borrowers during the pandemic, payments have now resumed and could potentially add a layer of stress for employees already trying to keep up with inflationary living costs.

Shifting financial priorities

With an average student loan balance of $37,318,² college graduates entering the workforce may prioritize paying down their student debt over contributing to their workplace retirement plans or saving for future health care costs. Our 2023 Workplace Benefits Report shows the number of employees continuing to prioritize saving for retirement is down compared to the previous year, and 45% of employees say they are not saving for health care due to debt and unexpected expenses.³

Employer assistance programs

Many companies are starting to offer student loan repayment assistance programs to help employees manage debt and continue to work toward their financial goals for the future. Of particular interest to employers is a new opportunity to support employees afforded by the recent passage of the SECURE 2.0 Act. A provision in the new legislation allows employers to make matching contributions to 401(k), 403(b), 457(b) and SIMPLE IRA plans for any qualified student loan payments made by an employee. We will continue to update employers interested in this opportunity as we build our program to support this optional provision in the future.