What is a Student Loan Retirement Match?
For millions of employees burdened by student loan debt, balancing loan payments with the need to save for retirement is a significant financial challenge. Faced with the decision to either pay down debt or invest in their future, many feel trapped between these critical financial priorities.
Thankfully, employers are beginning to offer an innovative solution known as the Student Loan Retirement Match. This benefit allows employees to reduce their student debt while also building their retirement savings. This forward-thinking program is gaining traction among companies looking to help employees meet their short-term and long-term financial goals.
How Does a Student Loan Retirement Match Work?
A Student Loan Retirement Match helps employees pay off their student loans while saving for retirement. When an employee makes a student loan payment, it is verified to ensure it qualifies for the match. This is known as a Qualified Student Loan Payment (QSLP). After the payment has qualified as eligible for the match, the employer contributes a matching amount to the employee’s retirement account.
Here’s how it works step by step:
Step 1: An employee makes a regular student loan payment; no additional payment is necessary.
Step 2: The payment is reviewed and verified to confirm it qualifies for the employer retirement match.
Step 3: The employer contributes to the employee’s retirement account, ensuring contributions do not exceed the maximum match according to the plan guidelines.
Why is a Student Loan Retirement Match Important?
Retirement and education costs are among the most expensive aspects of the American Dream. The combined cost of education and retirement savings can create a significant financial burden for many people. This is where a Student Loan Retirement Match comes into play—helping individuals simultaneously address both primary financial goals.
College Education Costs: Student loan debt continues to rise, with over 42 million Americans burdened with loan repayment with an average balance of over $40,000 — hindering them from saving for retirement.
Retirement Savings: On average, Americans need to save well over a million dollars to retire comfortably, yet many delay contributions due to student loan debt. Missing out on early contributions can affect the compounding growth of retirement savings, making it harder to secure a stable financial future.
By offering a Student Loan Retirement Match, employers help employees tackle these two crucial financial concerns:
1. Debt Reduction — Employees can focus on paying down their student loans without sacrificing retirement savings.
2. Retirement Preparedness — Employees still receive matching contributions to their retirement accounts, helping them build wealth for the future (and start to do this sooner) even while managing debt.
This benefit is especially timely considering the recent Secure Act 2.0, which encourages employers to offer these matches as part of their retirement benefits package. As more employers adopt this practice, employees no longer have to choose between paying off student loan debt and saving for the future—they can do both.
Key Benefits for Employers
In today’s competitive job market, employees are looking for more than just salaries—they seek benefits that address their real financial concerns. Offering a Student Loan Retirement Match is an excellent way for employers to distinguish themselves and offer a meaningful solution to the financial stressors facing today’s workforce.
Here’s why employers should consider implementing this program:
Improved Employee Retention
Employees struggling with financial stress are likelier to leave for higher-paying jobs or better benefits. Providing a Student Loan Retirement Match shows that employers are committed to their financial well-being, which helps to increase employee loyalty and reduce turnover.
Boosted Productivity and Engagement
Employees less worried about their finances are more likely to be focused and engaged at work. Employers can create a more motivated and productive workforce by helping employees tackle student loan debt and retirement savings.
Enhanced Employer Branding
As more organizations adopt innovative benefits packages, offering a Student Loan Retirement Match can be a key differentiator that helps attract top talent — especially among younger workers with student loan obligations.
How to Implement a Student Loan Retirement Match Program
Employers looking to introduce a Student Loan Retirement Match may find the implementation process easier than they think — employers could even launch a program this year. Platforms like SavvyFi specialize in providing seamless solutions that integrate this benefit into an employer’s existing benefits package.
Employers can set up the program by:
Leveraging existing budget
In many cases, companies can allocate existing retirement match budgets to support the Student Loan Retirement Match Program, minimizing additional costs.
Partnering with a specialized provider
A third-party platform like SavvyFi can help streamline the implementation of a Student Loan Retirement Match.
Determining eligibility and plan design
Review the Secure Act 2.0 guidelines and decide who qualifies for the program. Then, work with legal or plan administrators to update your retirement plan documents.
Informing employees
Communicate the new benefit to employees. Let them know how it works, how they can qualify, and what proof of student loan payments they’ll need to provide.
Processing the match
Match amounts are calculated, processed, and deposited into each employee’s retirement account.
A Win-Win for Employers and Employees
As the landscape of employee benefits continues to evolve, offering a Student Loan Retirement Match is a forward-thinking way to help employees achieve financial freedom while securing their future.
For employers, it provides an opportunity to invest in their workforce’s financial future, enhance retention, engagement, and recruitment efforts, and keep costs under control.
In the wake of the Secure Act 2.0 and growing employee demand for innovative financial benefits, now is the perfect time for companies to explore how a Student Loan Retirement Match can help them stay competitive and support their employees’ long-term success.
Curious about implementing this program at your organization? Learn more about how SavvyFi can help you provide this valuable benefit to your workforce today.
About SavvyFi: SavvyFi is a user-friendly fintech platform that makes it easy for employers to provide college savings and student loan benefits to their employees. Because the company’s platform is “zero-touch” to HR — without any complicated systems, integrations, or paperwork — SavvyFi unlocks education financing capabilities to even the smallest employers that would not otherwise be able to offer these benefits.
Disclosure: Third-party quotes shown may not be representative of the experience of all SavvyFi customers and do not represent a guarantee of future performance or success.
