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EBRI Study Overview: Balancing Student Loan Debt Payments with 401(k) Contributions

Recent EBRI research reveals an all-too-common challenge employees face today.

Quick look: Recent EBRI research reveals an all-too-common challenge employees face today is paying off student debt while also trying to save for retirement. To help alleviate financial stress (and subsequently, improve work productivity and employee retention), it’s beneficial for brokers to explore solutions which support financial wellness goals.

A new study from the Employee Benefit Research Institute (EBRI) reveals student loan debt payments are having a negative impact on 401(k) employee contribution rates. Among its findings, EBRI reported 31% of participants who were making student loan debt payments at the beginning of the study period increased their contribution rate by at least one-percentage point after payments had stopped.

However, being able to balance both has become a financial burden taking a toll on employees.

In light of this, financial benefits have been on the rise. These range from tuition reimbursement, student loan repayment plans, and financial counseling, in addition to the traditional retirement savings plans employers typically provide.

In 2023, 68% of medium-sized companies and 50% of small employers plan to increase their financial wellness investments. Business leaders have recognized the correlation between reducing employee financial stress with increased productivity and job performance. Therefore, it’s a win/win solution that can alleviate some of the financial concerns employees face today.

By customizing benefits in this way, it helps to increase overall job satisfaction and supports recruiting, retention, and company growth goals.  As brokers work with their SMB clients on shaping their benefit plans, it’s valuable to review what financial offerings will have the most lasting impact.

How student loan benefits add value for SMB clients

Although there’s been quite a fluctuation in the job market over the past few years, a report from U.S. Bankshows over 350,000 jobs were added in January 2024 with a 4.5% earning average increase. Greater job availability leaves room for employees to be selective about where they work.

However, increased pay isn’t always the ultimate deciding factor as people strongly consider benefits as part of a comprehensive compensation package. Thus, adding a niche offering like student loan repayment assistance can be a competitive advantage for SMBs to recruit and retain top talent.

Moreover, introducing a professional employer organization (PEO) partner like ExtensisHR gives broker clients the personalized attention necessary to strategize benefit plans which are most relevant to their company’s needs. SMB leaders receive premium benefits, including financial wellness offerings, at negotiated rates to make them competitive with large companies.

Here’s how expanding benefit services through a PEO can make a difference for brokers and their clients:

Employee financial wellness

Benefit demands have evolved over the years. In addition to physical health care and standard retirement plans, employees seek mental wellness and financial health assistance as well. Implementing financial assistance, such as student loan repayment benefits, shows an investment in employees’ overall health and well-being.

But it’s not only a payoff for employees, employers feel the positive effects as well. Improved financial wellnesshas proven to increase employee satisfaction and loyalty, heightened engagement at work, and greater employee productivity and performance. This nurtures company morale and ultimately contributes to a higher retention rate.

Tax regulations and advantages

Changes to employee benefits laws may offer financial incentives for SMBs. In collaboration with a PEO partner, brokers can provide clients advice on how to structure benefits to maximize potential tax advantages while remaining compliant with current regulations.

Consolidated Appropriations Act (CAA)

The Consolidated Appropriations Act (CAA) benefit has been extended through December 2025. This allows employers to contribute up to $5,250 in student loan repayments per employee per year. Regardless of whether repayment is issued directly to the employee or the student loan service provider, these repayments are tax-free.


As part of the SECURE 2.0 Act, SMB clients can encourage employees to save for their future as they pay down student loan debt. SECURE 2.0 allows businesses to match employee 401(k) contributions according to their plan’s terms, even if the worker isn’t contributing to it. This is valuable for employees who may be struggling to balance student loan payments with saving for retirement.

Extended provider connections

Meanwhile, brokers enhance their competitive positioning by benefiting from a PEO’s provider network. Thanks to one of its most recent partnerships with tuition.IO, ExtensisHR offers SMB clients access to student loan management tools including:

  • Loan linking and aggregation
  • College funding preparation
  • Refinancing resources
  • Loan payoff projection
  • Repayment strategy finder

ExtensisHR also offers optional buy-ups for employer student loan repayment, tuition reimbursement, and 401(k) matching programs. Incorporating student loan repayment benefits into a comprehensive compensation package can help SMBs attract and retain talent as they contribute to their employees’ financial well-being.

Adding value for clients with a PEO

As more employees try to juggle managing student loan debt with saving for retirement, the demand for student loan repayment benefits is increasing. When employers step in and provide solutions which directly address these types of challenges, it can shed a positive light on a negative situation.

Therefore, it’s crucial for brokers to stay ahead of industry trends and recognize the expectations and demands of modern employees. With the help of a PEO partner, brokers instantly add client value by expanding their services, connections, and expertise.

Also, in addition to benefit support and administration, a PEO offers a full suite of cost-effective HR and payroll services, as well as risk and compliance management, and recruiting and retention assistance. This allows both brokers and SMB leaders to grow and protect their businesses.

Furthermore, with ExtensisHR’s people-first approach, clients receive dedicated support and a tailored solution fit to address their company’s specific needs. Whether this involves adding a student loan repayment program or implementing financial wellness counseling, our team works with businesses to overcome their most pressing HR problems.

Learn more about how our personalized HR solutions can extend your scope of service and differentiate yourself from the competition. Contact ExtensisHR today.

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