A 401(k) is a great way to build a retirement fund, especially if your company is willing to match the employee’s input. This should mean most if not all employees should take advantage of it and use it right?
Some employees, especially those that are recent graduates, may not use it due to large outstanding student loans. In fact, this is the case for many employees.
THE BURDEN OF STUDENT DEBT
Student loan repayment plans are as important to recent graduates as access to a 401(k) plan. This makes sense because as many as 70 percent of graduates have some amount of student debt. With astronomically high numbers like these, it’s no wonder that some employees find it hard to adequately add to their retirement funds while making loan payments.
Additionally, some states have harsh punishments for unpaid student loans. Defaulting on payments can lead to serious drops in credit scores and it can even limit job opportunities and careers.
CORPORATE CONTRIBUTIONS AND SOLUTIONS
Helping employees pay off their student debts with student loan repayment plans is a great way to help recent graduates pay off their debts and allow them to invest more money into their 401(k) account. Moreover, this type of program increases employee recruitment, retention, and loyalty.
Since 401(k) plans are a way for companies to help workers prepare for their retirement, student loan repayment plans can be treated similarly. In fact, the idea that student loan repayment could one day be as important as a 401(k) plan isn’t that far-fetched. This line of thought has been adopted by many companies and is growing in popularity. The majority of job seekers under the age of 30 are even more likely to accept a job that offers student loan repayment plans.
As the national student loan debt continues to grow past $1.4 trillion, there could conceivably be a day where a student loan repayment plan is valued as highly as a 401(k) retirement plan. This is exactly why we want to form a partnership with your company that helps you and your employees by providing you the guidance and tools you need with this benefit. If you are looking for a way to implement a student loan repayment plan in your company or want more information, get in touch.