This company's retirement strategy starts with student loan repayment

• Key Insight: Learn how employers convert student-loan payments into 401(k) matches to align incentives.
• What's at Stake: Rising debt-driven retirement shortfalls could increase turnover and raise employer pension costs.
• Supporting Data: 46% of workers cut retirement contributions due to student loans; 94% want workplace relief.
• Source: Bullets generated by AI with editorial review

For millions of workers, student loan debt is what's keeping them from saving for the future. One company is making it so that their workforce never has to make that trade-off. 

Forty-six percent of workers report contributing less to their retirement plans because of student loans, according to data from healthcare company Abbott, and 94% say they would be interested in a workplace benefit that provides a 401(k) contribution in exchange for paying down that debt. To help their employees, Abbott launched Freedom 2 Save, a program that provides matching funds into an employee's retirement account while they're paying off debt.  

"We knew we had a population that was struggling to save for retirement because of their student loan debt," says Jaime Erickson, director of compensation and benefits at Abbott. "We didn't want that — we wanted them to focus on paying down their debt. So we thought, how cool would it be if we were able to [use the repayment process] to then contribute to their 401(k) on their behalf?"

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Through Abbott's Freedom 2 Save program, full-time and part-time employees who qualify for Abbott's 401(k) and are putting at least 2% of their pay toward student loan payments will receive the company's usual 5% 401(k) match deposited into their retirement account, even if they don't contribute anything to the 401(k) themselves. The goal is that employees use the money they were previously investing in their retirement fund to double their student loan repayments and cut their loan term in half, saving them even more money in fees and interest.

Making a broader investment in employees' financial well-being goes beyond helping workers manage their money. Programs like Freedom 2 Save are also designed to address larger workplace challenges, like improving retention and engagement.

"There are long term financial impacts on not being able to save for retirement or pay down your student loans," Erickson says. "And for businesses, that impact is that their employees won't retire when they want or be able to save as much as they need, [leading dissatisfaction and turnover]."  

Abbott's employees have already  put over $2.7 million toward their student loan debt overall, and Abbott has met those efforts by contributing over $10 million towards employees' 401(k)s. While not every organization has the means to implement a program as extensive as Freedom 2 Save, there are still many meaningful changes they can make to their strategies. In an effort to help them make those decisions, Abbott published a free blueprint that details how organizations can go about creating more comprehensive solutions. 

Read more: Congress renews effort to require 401(k) contributions by employers

"It always starts with knowing the audience," Erickson says. "Once you know what's standing in their way and keeping them from their financial goals, you can actually begin to help." 

For Abbott, the hope is that by taking a more intensive approach to reducing employees' financial stress, they can promote healthy, long-lasting engagement. As a result, in the new year they will be expanding their loan eligibility criteria so that even loans taken out in employees' families' names will be included. 

"We want our employees to come into work feeling great, productive and not burdened by their student loan debt," Erickson says. "We consider this program a win-win for both Abbott and our employees."