Some Employers Offer Student Loan Assistance – What You Should Know

Edward Gottfried, Senior Director of Product Management at Betterment at Work, joins Brad Smith at Wealth! to discuss how some employers are helping to ease some of the burden on their workforce and what this means for borrowers.

Gottfried tells Yahoo Finance: “It’s not yet that common for employers to play a direct role in helping their employees with student loan debt, but that’s changing relatively quickly.” He says: “Recent legislation that came into effect earlier this year “This allows employers to treat student loan payments as an entitlement to a 401(k) match.” So that means their employees who are actively paying off student loans, but may not be able to contribute enough to that 401(k) match To achieve this, you can instead provide evidence of 401(k) student loan repayments and obtain an employer match into your 401(k). So this is an interesting indirect opportunity for employers to play a more active role in supporting their employees.”

“Some employers also contribute directly to loans. So they may convert the repayments dollar for dollar into student loans,” Gottfried says, although he notes that option is “certainly less common.”

Gottfried says a rise in student loan repayment assistance is due to employers “doing whatever they can do to give themselves a little bit of a competitive advantage in hiring or retaining talent.” He compares the rise in student loan benefits with 401(k) offerings and says, “The 401(k) has become a really important benefit for employers of all sizes, whereas traditionally it was reserved for really large employers, now even small employers are offering it.”

For people seeking employer assistance in paying off their student loan debt, Gottfried says, “The most important first step is [to] Ask your employer what they do, what they support, whether this is part of the 401(k) program, and whether there is a separate program that will directly help you pay off your student loan debt.” He adds, “If this If this is not the case, I think it is very important to make it clear to your employer that you would greatly appreciate this. And if so, they should be able to give you some instructions on how you can benefit from it.”

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This post was written by Naomi Buchanan.