by Melissa Mesku
Student loans are awful, not just because they’re expensive, but because they’re unnecessary. The U.S. is one of the few developed countries that actively enables rapacious lenders to profiteer off students. It’s no news that this problem has reached a fever pitch; there’s a good chance you yourself are one of the unlucky majority who isn’t saving for retirement because you’re too strapped paying down your student loan. According to a study from Ipsos, 69% of millennials aren’t saving for retirement because of more pressing financial demands.
For millions of people saddled with student loan debt, things don’t necessarily get better even at a job that offers employee benefits. 401(k) isn’t much use if your disposable income is being disposed into the black hole of loan repayment. FINRA, the financial regulatory authority, estimates that American employees are missing out on approximately $24 billion in employer contributions each year.
Numbers like these are a slap across the face – employers have already allocated billions of dollars to support their employees with financial perks like retirement plans and matching programs, and employees are too indebted to even take advantage of it.
Billing itself as a ray of light in all this is a new program called Employee Choice, offered through BenefitEd. It allows employees to “redirect or split their employer-matched retirement funds to help them pay down their student loan debt.” According to a recent press release, the program gives employees the opportunity to choose how to use their matching funds, and allows them to pay down debt more quickly and position themselves to save for retirement.
It’s the first financial product of its kind. Like all financial products, it packages user choice (employees get more control over where their money goes) with massive windfall for financiers. But in a world where literal apocalypse seems more likely than debt forgiveness, this could be seen as an improvement. At the very least, as companies start to adopt products like this, debt repayment benefits just might become a standard perk for employees. It doesn’t make any of this forgivable, but it may make living with debt a little more forgiving.