Could Your Company Help You Pay Down Student Loans?

By: Lauren Mineau

One company is offering a helping hand to employees with a crippling financial burden many recent graduates find themselves with – student loan debt.

Recently, Fidelity Investments announced a program that will let employers make payments to their employees’ student loan account, just like they contribute to a retirement fund.

With many young workers more focused on paying off education costs than retirement saving, the program could be a good way to recruit entry-level workers that are likely to stay and grow with the company.

With the Student Debt Employer Contribution program, employers can make after-tax contributions towards participants' loans with Fidelity administering and fulfilling the payments. The program will pilot in the fourth quarter 2017 with a full rollout in early 2018. According to Fidelity’s website, the contribution is $2,000 annually, with a maximum of $10,000 contributed to an employee’s loan provider in total. With interest constantly growing on loans like this, it could ease the burden significantly.

"Employers turn to Fidelity as a trusted strategic partner, and it’s vital our customers have modernized, customized and creative programs to help their workforce be financially well today and into the future," said Kevin Barry, president, Fidelity Workplace Investing. "The Student Debt Employer Contribution program addresses a growing need across all generations struggling with student loans, in a 'one-stop' experience for employers."

The company will also provide debt management tools and help employees draft a personal plan of action to keep payments lower or pay off interest.

"We know student debt weighs heavily on people — more than a third of Fidelity retirement plan participants surveyed have student debt and 80 percent of those say it delays retirement planning. We can use Fidelity's market leadership to help employers alleviate the financial burden on their employees and make a positive impact on the growing issue of student debt," said Barry.

Student loan debt has been growing rapidly for the last decade or so, rising to nearly $1.4 trillion by late 2016, roughly 7.5 percent GDP. Approximately 43 million have student loans, with an average balance of $30,000, according to a recent CNBC article.

For many people, the large monthly payment associated with student loan debt can hinder progress in other areas. Buying a home or making other investments may be put on hold for those with big balances of college debt. Some help with that might make many areas of someone’s life better, perhaps other companies will follow suit.

Here's How Much The Average American in their 30s has in Student Debt 

Fidelity Launches New Program to Help Pay Off Student Debt