Betterment at Work senior director of product management Edward Gottfried joins Brad Smith on Wealth! to discuss how some employers are helping take some of the pressure off their workforce and what it means for borrowers. Gottfried tells Yahoo Finance, “It’s not that common yet for employers to play a direct role in supporting their employees with student loan debt, but that’s changing relatively rapidly.” He says, “Recent legislation that went into effect at the beginning of this year makes it possible for employers to treat student loan payments as eligible for a 401(k) match. So what that means is that their employees who are actively repaying student loans but may not be able to contribute enough to reach that 401(k) match can instead show evidence to the 401(k) of the student loan repayments and get an employer match into their 401(k). So that’s sort of an interesting indirect way for employers to play a more active role in supporting their employees.” “The other thing that some employers do is they will directly contribute to loans. So they’ll maybe match repayments dollar for dollar into student loans,” Gottfried says, though he notes this option is “certainly less common.” Gottfried says that a rise in student loan repayment support reflects employers doing “anything that you can do… to create a little bit of a competitive edge for hiring or for retaining talent.” He compares the rise in student loan benefits to 401(k) offerings, saying, “The 401(k) has become really a table stakes benefit across employers of all sizes, while traditionally it was reserved for really large employers, now even small employers are offering it.” For people looking for employer support in paying 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, whether they have a separate program to directly support you in repaying your student loan debt.” He adds, “If they don’t, I think it’s really important to make clear to your employer that that’s something that you would highly value. And if they do, they should be able to give you some instructions on how to take advantage of it.” To watch more expert insights and analysis on the latest market action, check out more Wealth here.
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