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Millennial and Gen Z employees admit to being distracted at work because of financial worry. This could save them

A former Fortune 500 CTO explains benefits that address student loan debt will go from being a nice-to-have to a need-to-have benefit for employers to offer.

Millennial and Gen Z employees admit to being distracted at work because of financial worry. This could save them
[Source photo: JP Valery/Unsplash]

It’s no secret that attracting employees—and then retaining them—is vitally important to every organization. This is especially true today when we exist in both a tight hiring market and at a time when macro conditions mean that finance teams are zeroing in on expenses across departments.

And it’s also not necessarily a new concept that going above and beyond a paycheck to support employees’ overall financial wellness via specific financial benefits is a major component of an attractive compensation package.

What is new is a hidden gem buried among the 100 or so provisions in Secure 2.0 Act, which just went into effect, that makes it possible for employers to match student loan payments with contributions to employer-sponsored 401(k) accounts. This means that employees who were previously passing up 401(k) matches due to the burden of student loan debt now don’t have to. And that’s powerful.

Here’s why leveraging Secure 2.0 to match student loan payments via retirement contributions will be a must-have employee benefit by 2025.


One in four of the country’s more than 129 million privately employed workers have student loan debt, and now that student loan payments have resumed for the first time in three years, employees are increasingly looking to their employers for help.

As a result, benefits that address student loan debt and education expenses specifically will go from being a nice-to-have to a need-to-have benefit for employers to offer.

A shift is already in motion. Student loan assistance is the fastest-growing employee benefit, with 17% of employers now offering a program, and another 31% that intend to launch a program in the upcoming year. And this shift is driven by demand—one survey found that 78% of student loan borrowers think their employer should help them with student debt.

We know that student loans can have negative consequences for the financial security of those who are saddled with them. Saving for retirement is a particularly big piece of that puzzle. Research repeatedly shows that folks with student loan debt will prioritize paying off their debt over saving for retirement. This will get even worse now that payments have resumed and borrowers lose an average of $400/month from their budgets.

Missing out on a 401(k) match because of student loan debt doesn’t just mean a less secure financial future for individuals—it changes the way prospective employees evaluate a benefits package.

It stands to reason that prospective employees with student loans might prioritize offers with bigger base compensation, and care less about benefits like retirement match if they’re burdened with student loan debt. Does a match matter if they don’t have the financial freedom to contribute in the first place?

But if you’re able to count student loan payments and match that amount into a retirement plan, then all of a sudden, that employee is able to work towards both financial goals of paying down debt and saving for retirement. It’s a win-win. It can also be easy to implement (with the right partner); the rules state that a student loan matching policy has to mirror exactly how you match retirement contributions, so ideally, it should be a simple update to your retirement plan design.


In any given month, about half of workers are engaged in the process of leaving their jobs. Among workers with student loan debt, that number increases to more than three out of every five. The financial stress of carrying this debt can cause problems with sleep, health issues, and poor performance for employees.

Nearly half of millennials and a third of Gen Z workers admit to being distracted at work because of their finances. Of those distracted employees, 49% say they spend at least three hours per week thinking about or dealing with personal finance issues while at work, taking time and productivity away from their job.

Reducing the negative impact of financial stress starts with reducing the financial stress itself—and this is something well within the grasp of organizations that are already set up with retirement plans for employees.


Debt disproportionately impacts students from marginalized communities—on average, Black college graduates owe $25,000 more in student loans than white graduates, and four years after graduation, Black students owe an average of 188% more than white students borrowed; that disparity reflects and amplifies the historic wealth gap between communities of color and white communities.

Student debt also tends to impact women more than it does men. Women hold almost two-thirds of all student debt. And if you think this only impacts your millennial and Gen Z employees, you’re wrong. The fastest group of borrowers is people over 50 who are taking out loans for their childrens’ education.

Each individual’s student debt burden affects an organization’s ability to attract and support a diverse workforce—addressing student loan debt via an affordable, tax-advantaged program like Secure 2.0’s retirement matching can create a true sea-change for DEIB efforts.


This just-implemented policy is a lifeline for the 43.6 million borrowers who collectively owe an estimated $1.77 trillion in student loan debt, but it’s a boon for employers too. By matching student loan payments as retirement contributions, employers can shift benefits to meet the needs of their workforce, without adding a new expense to their benefits package—what’s not to love?

That said, you’re not alone if you’re daunted by the prospect of understanding who among your employees are making qualifying student loan payments, how to manage enrollment and make this program simple for both plan administrators and employees. The good news? Recordkeepers as well as Payroll, HCM tech companies and upstarts dealing specifically in student loans, like Summer, are one step ahead of you, and are ready to add this benefit to your existing plans (if you choose the right one), and to help make implementation simple.

Ultimately, Secure 2.0 could be a watershed moment for benefits, and if you miss the boat now, you might find yourself losing talent to competitors down the line. And importantly, setting up employees on secure financial footing for the long term isn’t just a strong talent play, it’s the right thing to do.

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