Several retirement plan administrators said their clients are still figuring out how the new benefit might work in practice, and whether it makes sense for their employees. And not all employers will rush in: Some companies have wondered, for example, if the feature might seem unfair if people who chose more costly schools are benefiting. There are also administrative complexities to consider.
“2024 is going to be a year that student loan match provisions could come to some 401(k) plans near you, but it may be closer to the end of the year,” said David Stinnett, head of strategic retirement consulting at Vanguard, which oversees workplace plans for five million participants.
The plight of student debt borrowers has increasingly become a national focus, as tuition costs accelerated faster than income growth and total loan balances eclipsed credit card and other consumer debts. The issue was catapulted into the spotlight again when President Biden made student debt relief a centerpiece of his agenda. After his plan to forgive up to $20,000 in debt for millions of borrowers was shut down by the Supreme Court, the administration turned its focus to more targeted relief, along with the introduction of more generous income-driven repayment plan called SAVE.
In fact, SAVE enrollees who qualify for zero-dollar monthly payments — or those earning less than $32,800 as single borrowers, or those in a family of four with incomes less than $67,500 — wouldn’t qualify for the 401(k) match because they’re not making payments.
Younger workers have been enrolling into workplace plans at higher rates than they have historically, plan administrators say, in large part because they are often automatically enrolled.
“It is just getting people started,” said Rob Austin, head of research at Alight Solutions, which oversees plans for large employers and recently worked with Eli Lilly, the pharmaceutical company, to add the feature. “And then hopefully they will begin contributing on their own behalf.”