Fidelity is introducing a new savings solution for employees who want to pay down their student loan debt while allocating for retirement.
The Student Debt Retirement platform, introduced by the organization today, would allow companies to contribute to an employee’s workplace retirement account each time they make a payment towards their student loan debt. In the year ahead, Fidelity anticipates offering the platform to over 1.2 million Americans.
“Student debt is a barrier that prevents so many Americans from participating in important life milestones – particularly saving for retirement,” says Jesse Moore, senior vice president, head of Student Debt at Fidelity Investments.
A higher number of employers are offering student loan matching features after federal student debt payments resumed in October 2023, and as legislation makes it easier for companies to provide student loan assistance. The Student Debt Retirement platform is backstopped by a feature included in SECURE 2.0 legislation, which allows employers to treat student loan debt payments as if they are 401(k) contributions.
Other organizations are taking advantage of the benefits to recruit and retain workers, especially as Fidelity data shows that employees consider student debt assistance as a top benefit that contributes to their financial wellbeing. Last month, Chipotle Mexican Grill announced it would offer SoFi’s Student Loan Verification (SLV) service to help its employees pay off student debt while saving for retirement. Specifically, once an employee is eligible for the fast casual chain’s 401(k) match, Chipotle would contribute up to 4% of their salary towards their 401(k), as long as the employee makes eligible student loan payments.
Fidelity argues that with student loans aside, workers can shift their attention towards retirement savings. According to retirement trend data from its student debt tool, Fidelity reports that borrowers had used the previous federal pause to focus on retirement savings, with 72% of student loan borrowers contributing at least 5% to their 401(k), compared to only 63% prior to the payment pause.
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