Employers can now match student debt payments with retirement contributions. Will they?

Employers are hesitant to offer workers a new perk that would help many of them pay down student loans while saving for retirement, despite a law that makes it easier for companies to do so, experts say.  

The SECURE Act 2.0 Act, which became law in December 2022, included a provision allowing employers for the first time this year to count student loan payments toward matching 401(k), or other retirement, contributions. It aims to help Americans avoid the difficult choice of using their money to repay student loans or save for retirement. 

But lingering economic worries, including the chance of a slowdown, could foil those plans.

Companies aren't in a hurry to offer workers the benefit amid the uncertainty, experts say. That will keep borrowers wringing their hands on how to best use their income. 

Nearly two-thirds of companies that the nonprofit trade association Plan Sponsor Council of America surveyed this year said they won't offer student loan matching and only 5% have implemented it or plan to this year. When asked why they didn’t plan to offer this benefit, answers ranged from cost, complexity, competing priorities, lack of interest or necessity. 

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“Compensation teams across the corporate world are laser-focused right now on cost control, so I suspect that many will be reluctant to consider expanding their benefit offerings,” said Aaron Terrazas, chief economist at job site Glassdoor. 

That said, certain industries like health care and professional services that need to attract and retain talent may make the move faster, said Tom Armstrong, vice president of customer analytics & insight at Voya Financial.  

What is student loan matching? 

When you make a student loan payment, your company would contribute to your 401(k), 403(b) or other qualifying retirement accounts plan. The exact match structure depends on company policy, and employees would have to certify annually they made qualifying student loan payments. 

A simple example is if your company offers a 4% 401(k) match for contributions, you could make a student loan payment and get a dollar-for-dollar match up to 4% of your salary.  

Keep in mind the student loan matching program mirrors the 401(k)-match benefit, so the match percentage, eligibility, and vesting rules are the same. Vesting means that you may have to stay at your company for a certain length of time or risk losing some or all your match from your employer. If all your retirement savings are from matching and you’re not fully vested, you could lose some or all of those savings. 

Will more companies offer student loan matching in 2024? 

As we move further into 2024, Voya's Armstrong said he expects more companies to consider this benefit. “There’s not massive adoption, but there’s increasing levels of interest,” he said.

"If the student debt crisis continues to be a crisis, student loan benefits of some type will be common at companies, but I'm not sure it will be this one," said Stacey MacPhetres, senior director of education finance at EdAssist by Bright Horizons, which provides educational advisory services to organizations and families.

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Companies offer other student loan help 

Some companies already help employees pay down student loans and don’t feel the need to change their benefits. Others say their employees want immediate help paying down their student loans and prefer direct payments to whittle down their balances instead of a retirement match, MacPhetres said. 

Through 2025, employers can offer up to $5,250 in student loan repayment benefits tax free, thanks to the Consolidated Appropriations Act of 2021. Last October, 34% of employers offered student loan benefits, up from 17% in 2021, according to human resources software company Paycor. 

Some businesses also offer student loan payment counseling and third-party, low-interest or interest-free educational loans along with debt consolidation and refinancing services. 

Companies like Staples, Fidelity, Chegg, Connelly Partners, ChowNow, and First Republic Bank offer some of these options. 

How many people can benefit from corporate student loan assistance? 

About 45 million Americans have student loans collectively worth $1.75 trillion.  

Of the 22 million borrowers who had payments due in October after the student loan payment pause ended, 60% missed their payments, according to the Department of Education. 

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.