Paying Student Loans Can Jump Start Retirement Savings!

employee sitting with laptop

By Stacey MacPhetres, Senior Director, Education Finance

May 1, 2023 – Student loan experts are often asked if individuals should focus more on paying student loans or saving for retirement. The most complete answer is that individuals should try to do both and now, recently passed legislation allows for exactly that. 

The SECURE (Setting Every Community Up for Retirement) 2.0 Act was signed into law in late 2022, introducing 92 new retirement-related provisions that expand on the original SECURE Act passed in 1999. Key among those provisions is one that allows employers to treat employees’ student loan payments as elective deferrals to qualified retirement programs like a 401K, effective January 1, 2024.  

The new law would allow companies to make matching retirement contributions to employees qualified retirement programs in alignment with their program rule based on their student loan payment, regardless of whether or not the employee is directly contributing to their own retirement. This will allow employees who are burdened with student loan payments to begin planning for retirement. 

This law creates a great opportunity for individuals struggling with all aspects of their financial health due to large student loan debt burdens. But, the provision does not provide direct relief to borrowers’ student loans.  While millions of borrowers are awaiting the decision from the Supreme Court on the Biden-Harris Student Loan Forgiveness program, it is recognized that millions will still have student loans to be repaid. Couple that with the expectation that the CARES Act student loan provisions could end as early as September and millions of federal loans will re-enter repayment.  

Because of the complexity around student loan repayment, it is recommended that employers considering taking advantage of the Secure Act 2.0 student loan provision and also include a student loan expert coaching program as a part of their offering to ensure that employees are taking all of the steps needed to achieve their student loan goals. Offering a program that includes payment to servicers or directly to retirement paired with coaching will help employees build strategies toward good financial health and will boost employer loyalty and allow for recruitment and retention of workforce talent.  

The Secure 2.0 student loan provision is currently in implementation at the U.S. Treasury and is expected to be live for contributions made for plan years beginning January 1, 2024. Stay tuned to this space for additional updates as we receive guidance from Treasury.   

About Stacey MacPhetres, Senior Director, Education Finance

In her current role, Stacey manages the team of student loan coaches who guide employees of our Student Loan Support program through the very complicated world of student loan repayment. 

Stacey has devoted her 30+  year career to education finance, student loan repayment and financial literacy. With extensive experience in financial aid administration at Emerson College and Elms College and as a consultant at Mt. Holyoke College, she has counseled thousands students and families through the college finance process. In addition, she spent more than a decade working as a vice president in education finance at JPMorgan Chase, where she was responsible for managing federal and private loan portfolios and financial literacy programs. 

Stacey and her team have a passion for guiding borrowers through the student loan repayment process while helping them identify and meet their personal financial wellness goals.  The student loan coaching team focuses on guiding employees in all industries but has a keen understanding of the process and steps associated with student loan forgiveness programs.  

Stacey holds a bachelor’s in political science from Marist College and a master’s in political communication/marketing from Emerson College. Stacey has been featured as an education finance and student loan expert in numerous news outlets, including, the Wall Street Journal, Money, CNBC, NBC News and Associated Press (AP) News. She is a frequent guest on the podcast, "Getting In: A College Coach Conversation" and presenter at student loan and college finance industry conferences.