Partnership with student loan benefits start-up creates pathway for plan sponsors to use student loan debt as a catalyst to increase retirement savings
NEWARK, N.J.–(BUSINESS WIRE)–Prudential Retirement has partnered with Student Loan Genius, becoming the first retirement plan recordkeeper to offer the start-up’s new 401(k) contribution feature, the company announced today. The innovative feature enables companies to reward employees for making student loan payments by providing a pre-tax contribution into their retirement accounts. Prudential Retirement is a business unit of Prudential Financial, Inc. (NYSE:PRU).
According to American Student Assistance, federal student loan debt hovers over $1.2 trillion, while private student loan debt stands at $150 billion. For many U.S. workers, student debt—for themselves, for a spouse, significant other or a child—has increasingly become a major roadblock to saving for their future.
“As student loan debt grows, workers are having to choose between paying off their student loans or prioritizing other important financial goals,” said Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement. “For example, our research tells us many workers will choose to pay down debt rather than save for retirement. As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers.”
The new partnership with Student Loan Genius will enable Prudential Retirement to offer an innovative benefit to clients that gives their employees an opportunity to build retirement savings while paying down student debt. Employers who offer this retirement savings vehicle gain a competitive advantage, as it enables them to attract and retain top talent.
The benefit works this way: If an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pre-tax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching contributions. The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.
“We’re excited to team up with Prudential Retirement to offer our 401(k) contribution feature and platform to their clients,” said Tony Aguilar, CEO of Student Loan Genius. “As a retirement provider that works with thousands of organizations to help their employees retire confidently, Prudential has deep expertise working with employers and participants and can offer insights that help us better understand workers’ savings behavior and the challenges they face in saving for retirement.”
In February, Gibraltar Ventures, an affiliate of Prudential Financial, participated in the seed funding round for Student Loan Genius.
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation recordkeeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4 million participants and annuitants. Prudential Retirement has $368.9 billion in retirement account values as of December 31, 2015.
Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or its affiliates. PRIAC is a Prudential Financial company.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/
Contact: Monique Reuben
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Backed by some of the country’s top financial entities, Student Loan Genius’ student loan benefits help employers attract, retain and engage with top talent
Austin, TX – February 17, 2016 – Student Loan Genius, Austin-based student loan benefits provider, today announced that the company has raised $3 million in seed funding, largely spearheaded by Gibraltar Ventures, an affiliate of Prudential, along with an affiliate of John Hancock/Manulife. Other participants in the round included Kapor Capital, which invests in organizations led by diverse teams that develop social impact solutions, Capital Factory and Village Capital.
In a nation where 70 percent of graduates are carrying student loans that average more than $35,000, student loan benefits are a particularly attractive sector for investors and employers. What makes Student Loan Genius unique is its only-of-its-kind, three-pronged approach to offering these benefits. This approach has already captured the attention of 45 companies, who have incorporated Student Loan Genius’ student loan benefits into their employee offerings.
“We are excited to be part of Student Loan Genius’ future as they empower businesses to help their employees get to that next stage in their lives,” said Chris Penner, vice president of investments for Gibraltar Ventures. “By providing student loan benefits that help employees pay down debt faster, Student Loan Genius is delivering an innovative, competitive advantage to businesses by helping them attract and retain top talent.”
Student Loan Genius will use the funding to continue its growth and roll out new products that will reshape the way student loan benefit packages are offered.
“Student Loan Genius has the potential to impact thousands of lives across the U.S.,” said Tim Ramza, chief innovation officer of John Hancock/Manulife. “This innovative approach will reshape the way student loan debt is tackled and positively remake the relationship between employers and their employees.”
With Student Loan Genius’ robust Genius Platform, employers can contribute matching dollars toward employees’ student loan payments through ‘Genius Match’ – similar to a 401k. The end result for the average Student Loan Genius user is a savings of $31,291 and an average repayment time reduction of 12 years.
In addition to Genius Match, Student Loan Genius subscribers also have access to two additional features to help employees take control of their student loans: the ‘Genius Advisor,’ which identifies the best repayment plan and provides a 1:1 advisory service to employees, and the ‘Genius Pay’ system, which deducts payments directly from payroll and allocates them in the most advantageous way possible.
“We are thrilled that companies like Gibraltar Ventures, along with an affiliate of John Hancock/Manulife and Kapor Capital realize the value and want to support what Student Loan Genius is doing,” said Tony Aguilar, co-founder and CEO of Student Loan Genius. “Aside from the business opportunity, we see these large investments as indications that these firms really want to help people with every aspect of their financial life, starting with student loan debt and retirement savings, two of the largest concerns of working professionals. Clearly, they believe in innovation, they recognize what we’re doing to help people, and they’re making a commitment to invest in the lives of today’s graduates – the future of the workforce.”
ABOUT GIBRALTAR VENTURES
Gibraltar Ventures, the innovation lab and venture capital affiliate of Prudential Financial, Inc., focuses on innovations in Prudential’s core businesses: retirement, protection and asset management. Prudential’s companies include The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S. Gibraltar Ventures believes the future of finance lies beyond finance. We invest in companies that help others pursue behavioral finance and new technologies that transform the future of transactions and engagement.
ABOUT JOHN HANCOCK AND MANULIFE
Manulife Financial Corporation is a leading international financial services group providing forward-thinking solutions to help people with their big financial decisions. We operate as John Hancock in the United States, and Manulife elsewhere. We provide financial advice, insurance and wealth and asset management solutions for individuals, groups and institutions. At the end of 2015, we had approximately 34,000 employees, 63,000 agents, and thousands of distribution partners, serving 20 million customers. At the end of December 2015, we had $935 billion (US$676 billion) in assets under management and administration, and in the previous 12 months we made more than $24.6 billion in benefits, interest and other payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong. Follow Manulife on Twitter @ManulifeNews or visit www.manulife.com or www.johnhancock.com.
ABOUT KAPOR CAPITAL
Based in Oakland, California, Kapor Capital invests in seed stage tech startups that generate both economic returns and positive social impact. They believe that diversity is a strategic priority for the tech industry.
ABOUT CAPITAL FACTORY
Capital Factory is the center of gravity for entrepreneurs in Austin. Last year more than 50,000 entrepreneurs, programmers and designers gathered day and night for meetups, classes and coworking. We meet the best entrepreneurs in Austin and introduce them to their first investors, employees and customers. We have a series of matching funds so that a startup can convince 2 of our mentors to invest personally it can unlock hundreds of thousands of dollars in additional automatic funding.
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