New feature offers employees pre-tax contributions to their 401(k), triggered by student loan payments
Austin, TX – March 2, 2016 – Student Loan Genius, Austin-based inventor of the first complete student loan benefits solution, today rolled out its 401(k) contribution feature, which empowers employers to help their employees get a leg up on retirement savings while reducing their student loan debt.
Put simply, employees make their student loan payments, and based on a payment, the company makes a pre-tax contribution into the employee’s 401(k) or other retirement account. By putting unused, already budgeted, pre-tax retirement plan dollars to work, this new feature helps break down one of today’s biggest investment road blocks for employees held back by student debt.
“Our 401(k) contribution feature works with existing benefits frameworks, so we don’t have to wait for Congress to make a change to the tax code to enable companies to use pre-tax dollars for a student loan benefit,” said Tony Aguilar, CEO of Student Loan Genius. “We want to be the catalyst for why Congress passes legislation that helps eliminate today’s growing, $1.3 trillion student loan problem. We’ll do it by showing the impact pre-tax contributions can have on families, businesses, and ultimately, the entire economy.”
According to one employee burdened by nearly $30,000 in student loans, “If a company approached me with the added perk of student loan assistance, it would be a really tempting offer.” A 2015 study of employees also showed that 83 percent of employees say a student loan benefit would be a deciding factor in employment. By offering the 401(k) contribution feature, employers gain a powerful tool for recruiting and retention while providing a benefit that won’t come back to bite at tax time.
The class of 2015 was the most indebted in the history of the United States. Unfortunately, with more than 70 percent of graduates carrying sizable student loans, the ability to save for retirement while paying off a mountain of debt is just not in the cards for most.
“We don’t just have a student loan problem. We have a personal financial crisis,” Aguilar said. “Because of our student loan debt, we can’t save, buy homes or invest for retirement.”
To tackle this problem, the 401(k) contribution feature converts student loan payments into a wealth-building activity. This effectively doubles the financial impact of student loan payments, providing a way for employees to pay off their student loans faster while simultaneously growing the nest egg of wealth waiting for them upon retirement.
Together, these three elements make up Student Loan Genius’ comprehensive ‘Fix, Pay, Match’ approach to eradicating student debt, setting the company apart as a true ‘financial unicorn’ in the student loan benefit space.