The race to repay student loans has a new entrant.
To increase recruitment and retention, and ease the burden of student loan debt, Fidelity Investments is offering employers a new program to help employees pay off undergraduate or graduate student loans more quickly.
According to personal finance comparison site Make Lemonade, there are more than 44 million student loan borrowers who collectively owe more than $1.4 trillion in student loans.
The average student in the Class of 2016 has $37,172 in student loan debt.
With its new Student Debt Employer Contribution program, Fidelity will help employers make after-tax contributions towards their employees' student loans.
“Employers turn to Fidelity as a trusted strategic partner, and it’s vital our customers have modernized, customized and creative programs to help their workforce be financially well today and into the future,” said Kevin Barry, president of Fidelity Workplace Investing.
“The Student Debt Employer Contribution program addresses a growing need across all generations struggling with student loans, in a ‘one-stop’ experience for employers.”
Fidelity will administer and fulfill the student loan payments. The program will pilot in the fourth quarter of 2017 with a full roll-out in early 2018.
To attract and retain Millennials, in particular, companies are expanding their employee benefit programs to help reduce student loan debt for their employees.
Fidelity joins other market leaders such as Gradifi, Tuition.io and SoFi that assist employers with student loan repayment benefits.
“We know student debt weighs heavily on people — more than a third of Fidelity retirement plan participants surveyed have student debt and 80% of those say it delays retirement planning," Barry said.
"We can use Fidelity’s market leadership to help employers alleviate the financial burden on their employees and make a positive impact on the growing issue of student debt.”
In a 2015 American Student Assistance survey, 76% of respondents said that if a prospective employer offered a student loan repayment benefit, it would be a deciding or contributing factor to accept the job.
Only 4% of companies currently offer such a benefit, according to the Society for Human Resource Management, and employees are typically responsible for income taxes on the assistance received.
Fidelity's Student Loan Repayment Benefit
In addition to assisting other employers to help their employees repay student loans, Fidelity separately helps its own employees with student loan repayment.
Here is how Fidelity's student loan repayment benefit works for Fidelity employees.
Employees at the manager level and below of this leading financial services company are eligible to receive up to $2,000 per year toward repayment of their student loans.
The “Step Ahead Student Loan Assistance” benefit also provides employees with online tools to help them better manage their student loan debt.
Fidelity estimates that approximately 25% of its employees have student loan debt.
Another positive for Fidelity employees: since the student loan benefit is paid monthly, an employee who leaves Fidelity does not have to repay the benefit.
Tools To Help With Student Loan Repayment
Whether or not you work at Fidelity, there are several free online tools that you can use to help make more informed decisions about your student loans.
1. Review and understand your student loan terms
2. Determine if student loan refinancing or student loan consolidation makes sense for you
3. Use these strategies to help pay off your student loans faster.
4. Determine if you qualify for student loan forgiveness through programs such as Public Service Loan Forgiveness, Teacher Student Loan Forgiveness or through federal repayment programs.
5. Develop an action plan for student loan repayment
These student loan calculators can help you with student loan prepayment, student loan refinancing, and making a lump-sum payment or extra monthly payment.
Disclosure: SoFi is an affiliate partner of Make Lemonade
