Retirement Services

Bridging the Gap: Student Loans and Retirement Savings through Innovative 401(k) Matching

In December 2022, the Setting Every Community Up for Retirement Enhancement Act 2.0 (“SECURE 2.0”) introduced several pivotal changes aimed at improving retirement security for Americans. One such provision offers a groundbreaking opportunity, particularly relevant for HR, Total Rewards, and Benefits professionals: allowing employers to match student loan repayments as if they were 401(k) contributions. This innovative approach ensures that employees burdened by student loan debt do not miss out on valuable retirement savings.

Understanding the Student Loan Matching Provision (“SLM”)

Under SECURE 2.0, employers may provide a 401(k)* match to employees who are paying down their student debt instead of contributing to their retirement plans.

The student loan match provision recognizes that many employees, especially those right out of college, often face the difficult choice between paying off student loans and contributing to a 401(k). Previously, these employees would miss out on the employer match because they were not contributing to their employer sponsored retirement plan. Now, employers may make matching contributions to the employee’s 401(k) plan based on the amount they pay towards their student loans.

*Applies to 403(b) plans in the same manner as 401(k) plans

Why This Matters

With the federal student loan holiday ending in 2023, the reality of student loan repayments has resumed for approximately 45 million borrowers in the U.S., each carrying an average debt of $45,000. Furthermore, statistics suggest that over 50% of upcoming college graduates will begin their careers burdened by student debt. The student loan matching provision is not just a benefit but a necessity, helping to ensure that financial challenges do not compromise long-term financial security.

How It Works

The SLM is an optional plan benefit that requires coordination between employers, employees, and 401(k) service providers. For example, Fidelity Investments offers a product known as "Student Debt Retirement." Employees who wish to take advantage of this benefit must enroll through platforms like NetBenefits, very similar to their 401(k) registration. The employee submits student loan repayment details to Fidelity, which in turn, provides a year-end report to employers for the corresponding 401(k) match, which is typically funded at the end of the year when all student loan repayments have been made.

Other major financial institutions have started partnerships or have developed solutions to support this provision. Empower Retirement collaborates with Candidly, and Charles Schwab with Vault Advisor. These collaborations are designed to integrate student loan management services with retirement planning, ensuring a seamless experience for the user. Take note, though, as service providers may charge separate fees to enroll in the benefit and may impose employee count minimums.

Benefits to Employers and Employees

Offering a student debt retirement benefit is more than just an additional perk; it's a strategic move that can significantly enhance a company's value proposition to current and potential employees. In today’s competitive job market, such benefits can differentiate an employer, aiding in the attraction and retention of top talent, particularly among the younger workforce who are more likely to be impacted by student loans.

Next Steps for Interested Employers

Employers interested in implementing this benefit should start by consulting with their 401(k) plan service providers to understand the specific options and support available. Each provider may offer different solutions and understanding the details is crucial for integrating this benefit smoothly into existing employee benefits portfolios.


SECURE 2.0’s provision for matching student loan repayments is a forward-thinking solution that aligns an employer’s retirement benefits with the financial realities faced by many employees today.

By adopting this benefit, companies not only enhance their attractiveness as employers but also contribute positively to the financial wellness and future security of their workforce.

This is an opportune moment to reevaluate and potentially expand your benefits offering to include this valuable provision, ensuring your company remains a leader in employee benefits innovation.

©2024 Newfront Retirement Services, Inc. (CRD #167641) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration as an investment adviser does not imply any level of skill or training, and does not constitute an endorsement by the SEC. For a copy of Newfront Retirement Services disclosure brochure, which includes a description of the firm’s services and fees, please access

This material is provided for educational purposes only and does not constitute investment advice. The information contained herein is based on current tax laws, which may change in the future. Newfront Retirement Services cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in these materials does not constitute any legal, tax or accounting advice. Please consult with a qualified professional for this type of advice.

Sarah Schwartz
The Author
Sarah Schwartz, CIMA®, AIF®

VP, Retirement Services, Newfront

Sarah is a retirement plan advisor who helps employers build, maintain, and defend best-in-class plans for their employees. She is dedicated to providing relevant data and insights that enable employers to make informed decisions that align with business and culture. Key areas supported include monitoring and review of investments, plan design benchmarking, fiduciary support, ERISA guidance on compliance issues, plan transitions, M&A, and employee education. Sarah was named a 2022 & 2023 Top Women Advisor and Top Advisor Under 40 by the National Association of Plan Advisors.

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