Fidelity Expands Student Debt Benefit Program
The new options are part of a growing trend tying workplace benefits to repayment of student loan debt.
Fidelity Investments is expanding its Student Debt Benefit program to include more options for employers to help employees pay off their student loans.
Under the Student Debt: Retirement option, an employer allows its employees’ student debt payments to qualify for the company’s matching 401(k) contribution. Raytheon and The Travelers Cos. have signed up for the program, which will take effect in January 2020.
Also starting early next year is Fidelity’s Student Debt: Benefit Choice, which will allow employees to trade in paid time off not taken into student debt payments. Unum, the employee benefits company, has signed up for this benefit.
The new options are offered to employers that use Fidelity as a custodian.
Currently, Fidelity’s student debt benefit program consists of direct after-tax contributions by employers to the servicers of their employees’ student loan debt. Fidelity began offering this program, called Student Debt: Direct, to its own employees in 2016. To date, more than 10,000 Fidelity employees have benefited, saving $55 million in student debt principal and interest payments, an average $5,500 per person.
In total more than 75 companies have signed up for Fidelity’s Student Debt Benefit program and thousands more are offering the firm’s Student Debt Tool, Pre-College and Refinancing solutions, all offered through its NetBenefits platform.
The Fidelity offerings are part of a growing trend of new benefits companies are offering in order to attract and retain employees at a time when close to 45 million Americans owe more than $1.52 trillion in student loan debt. That’s greater than the debt owed for credit cards and auto loans and second only to mortgage debt, and it is affecting the ability of younger American to start families and buy homes.
(Related: More Companies Offering Student Loan Repayment Benefits)
Fidelity reports that 50% of its new hires with student debt said Fidelity’s Student Debt: Direct program was a major factor in their decision to join the company, and that staff turnover in the first year of the program fell approximately 75%.
“When it comes to attracting top talent, employer productivity or increased retention, expanding benefit selections to be more relevant to today’s workforce makes good business sense,” said Sangeeta Moorjani, head of production for workplace investing at Fidelity, in a statement.
Fidelity reports that 50% of its new hires with student debt said Fidelity’s Student Debt: Direct program was a major factor in their decision to join the company, and that staff turnover in the first year of the program fell approximately 75%.
“There are a growing number of companies increasingly aware that helping employees take on the issue of student debt can help improve their overall financial wellness, which can in turn have a positive impact from a business perspective in a host of ways,” said Moorjani.
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