Empower Retirement, CommonBond partner to expand student loan benefits
Roughly 9 million more employees may be able to access student loan benefits through a new partnership between CommonBond and Empower Retirement.
The student loan provider has partnered with the nation’s second-largest retirement services provider to offer student loan benefits to Empower’s 9 million plan participants through approximately 39,000 retirement plans, the companies said this week.
Under the new offering — which will be launched later this year — employers can make additional payments toward employees’ student loans or they can make extra retirement plan contributions for employees focused on paying down their loan balances.
The partnership should help boost the availability of student loan benefits, which are currently offered by only 4% of employers, according to research from the Society for Human Resource Management.
“There’s no better investment than taking advantage of educational opportunities for yourself or your loved ones. However, paying for that investment should not have to come at the expense of other financial goals,” Edmund Murphy, chief executive at Empower Retirement, says in a statement.
Overall, the Empower solution aims to help workers saving for retirement who also wish to pay down their student loan debt faster and improve their overall financial wellbeing. It will be available to all Empower retirement plans, in addition to Individual Retirement Account customers.
Features of the program include refinancing options; a support tool that provides recommendations on how employees can pay off their student debt or save for higher education; and a direct pathway for employers to make payments to employees’ student loan payments or to their retirement savings plan.
As student debt balloons to more than $1.5 trillion, both employers and providers are turning to student loan benefits as a way to combat the problem. Roughly 250 companies are working with CommonBond; other providers include Gradifi, Peanut Butter and Tuition.io.
In the last year, a number of employers rolled out programs in which they offer contributions to workers’ principal debt amounts, including Sotheby’s, Estée Lauder and insurance brokerage firm Crystal & Co.
Meanwhile, other employers are tying student loan benefits to retirement programs. AAA insurer CSAA Insurance Group recently announced a benefit that allows full- and part-time employees to use up to 4% of their employer-matched retirement benefit to pay down their student debt, for instance. And Travelers Insurance offers up to a 5% contribution to 401(k) plans when employees contribute to their student loans and retirement plan.
“Student loan debt is one of the key financial barriers to achieving other financial goals,” says CommonBond CEO and co-founder David Klein. “Half of American workers with student debt say the top item they sacrifice is saving for retirement.”
Advocates of student loan benefits say they help employers reduce workers’ financial stress over their debts — which inevitably makes its way into the workplace in the way of lost productivity, absenteeism and more.
“While only a tiny percentage of companies offer a student loan repayment benefit, as that percentage increases, it will have tremendous impact,” Jill Bright, Sotheby’s executive vice president of human resources and administration, told EBN last fall.