Travelers announces 401(k) match for student loan payments
- Travelers will soon take employee student loan payments into account when making 401(k) contributions, it announced Feb. 25.
- The benefit will take effect in January 2020 and is aimed at helping employees get out from under student loan debt while allowing them to save for retirement, the company said in a statement.
- While details of the calculation were not made public, Travelers said employees who participate in the program could accumulate tens of thousands of dollars in their 401(k)s over a decade. "Investing in their education shouldn't stop our employees from investing in their future. We are promoting a standard of employee care that enables them to do both," Alan Schnitzer, the company's chair and CEO, said in a statement.
As employees increasingly turn to employers for help with student loan debt, companies are looking for affordable ways to meet that demand. Last year, the IRS approved an employer's 401(k) incentive for student loan payments in a private letter ruling that it made public. Shortly after that, healthcare company Abbott announced that it would begin offering the retirement-student loan hybrid benefit; the employer eventually confirmed that it had requested the IRS letter. With its announcement, Travelers has become an early adopter of the option.
About 4 to 5% of U.S. companies currently offer student-loan repayment assistance, according to research from B2B research and ratings firm Clutch. And the benefit takes many forms, Nicholas Park, a benefits consultant for Corporate Synergies, previously wrote for HR Dive. Some offer direct assistance, while others help with refinancing or loan consolidation, he said. Others are investing more in financial wellness programs that teach participants how to deal with money.
One thing's for sure, however: The innovative benefit is popular among employees. More than three quarters of workers with student loans say they want their employers to offer a repayment benefit; such demand means these benefits have the potential to serve as a powerful aid in recruiting — a boon as unemployment remains at historic lows and workers cope with staggering student debt. Studies also have indicated for years that retirement saving is lagging; combining all three could be a win for employers and employees alike.