Dive Brief:
- Employers looking for a way to reward employees for making their student loan payments may be interested in the latest offering from Prudential Retirement. The benefit in question offers a pre-tax contribution into employee retirement accounts.
- To make it a reality, Prudential Retirement partnered with Student Loan Genius, a start-up that offers a 401(k) contribution feature. When an employer adds the feature to their plan, employees who make student loan payments within the program receive an employer-paid, pre-tax contribution to their retirement account, whether or not they contribute to their 401(k) plan or receive any matching contributions.
- The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.
Dive Insight:
Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement, explained that as student loan debt grows, workers often have to choose between paying off student loans or prioritizing other important financial goals.
For example, Prudential research reveals that many workers will choose to pay down debt rather than save for retirement. "As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers," he said.
As employers search for the next best thing in benefits, this program could make for a strong addition to an overall package. Student loans are a reality, and not an insignificant one. According to American Student Assistance, federal student loan debt hovers over $1.2 trillion, while private student loan debt stands at $150 billion.
