The Hidden Costs of Skipping Student Loan 401(k) Matching under SECURE 2.0

Under the SECURE 2.0 Act, employers can now match employees’ student loan payments with 401(k) contributions – a groundbreaking benefit for tackling student debt and retirement saving at the same time. Yet, some companies are hesitant to adopt this new perk. On the surface, not offering a student loan 401(k) match might seem like you’re saving money or avoiding complexity.

In reality, the “savings” may be an illusion. By forgoing this benefit, companies could be paying hidden costs in employee turnover, missed talent, and a less financially secure workforce. Let’s break down how not offering a student loan 401(k) match can quietly hurt your business in the long run.

Employee Retention: The High Cost of Turnover

One of the biggest hidden expenses in any organization is employee turnover. When employees leave, you incur costs recruiting, onboarding, and training replacements – not to mention lost productivity. So what causes employees to leave?

Increasingly, benefits (or lack thereof) play a major role. In fact, 59% of workers say a good 401(k) match is a reason to stay with their employer (Loan Certify Capabilities). If your company decides not to offer the new student loan 401(k) matching, you might be nudging some of your best people out the door.

Consider employees with student debt: they’re often torn between paying off loans and saving for retirement. Without a student loan match program, many will delay contributing to their 401(k) entirely – about 60% of employees with student loans put off retirement saving (Loan Certify Capabilities), leaving them financially vulnerable. This can lead to frustration and disillusionment.

Financially stressed employees are over 2× more likely to be job-hunting (From Worry to Wellness | Fiducient Advisors | Blog), which means higher turnover risk for you. And turnover is expensive – replacing an employee can cost anywhere from 120% to 200% of that employee’s salary (From Worry to Wellness | Fiducient Advisors | Blog) in recruiting and training expenses. Those costs hit your bottom line whether you notice them or not.

On the flip side, offering help with student loans can significantly boost loyalty.

One survey found 86% of young workers would commit to a company for at least five years if it helped pay down their student loans (Attracting and Retaining Talent with Student Loan Repayment Benefits). That kind of retention is gold. Even more broadly, 60% of employees (across all ages) say they’d be more likely to stay long-term if their employer offered financial wellness support (The Real Costs of Employee Financial Stress—and How Employers Can Help - Graystone Consulting - The Robertson Group | Morgan Stanley).

The takeaway: if you’re not offering a student loan 401(k) match, you’re likely losing people who would happily stick around if you did.

And it’s not just voluntary quits to worry about. When employees feel financially stuck, morale and engagement can drop, sometimes leading to performance issues that end in involuntary turnover. In short, not adopting the student loan match could cost you far more in turnover than the benefit itself would cost – especially now that SECURE 2.0 lets you offer the match with relatively little hassle.

Recruitment Competitiveness: Losing Out on Top Talent

We’re in a competitive job market, and job seekers are paying close attention to benefits. Student loan assistance is quickly becoming one of those sought-after perks that can sway a candidate’s decision. By skipping the student loan 401(k) match, companies risk looking less attractive compared to those who embrace this new benefit.

How much does it matter? Over three-quarters (77%) of employees with student debt say they’d be more likely to accept a job offer if the employer helps with student loan repayment (Student Loan Benefits on the Rise). That’s a huge pool of talent that might choose a competitor because you don’t offer what they need.

In a recent survey, 62% of private-sector workers said they consider their student loan situation when evaluating a job offer (Address student loan debt to attract, retain workers, research suggests | HR Dive) – meaning they’re thinking about how an employer’s pay and benefits will help (or hinder) their ability to tackle their debt. If you’re not addressing that concern, you could be cut from their list early on.

It’s not surprising then that student loan benefits are becoming a competitive advantage in recruiting. The number of employers offering some form of student loan repayment benefit tripled from 4% in 2019 to 14% in 2024 (Student Loan Benefits on the Rise), and that trend is continuing upward with SECURE 2.0 in effect.

Companies like Abbott Labs pioneered the idea of student loan 401(k) matching even before the law allowed it – viewing it as an “employee retention tool” and seeing over 1,000 employees enroll in the first year (At the top of HR lists in 2024: 401(k) match on student loan payments). And it’s not just Abbott; leaders at companies like Kraft-Heinz have said a student loan 401(k) match is “at the top of our list” for HR priorities (At the top of HR lists in 2024: 401(k) match on student loan payments).

By not keeping up, you risk being the odd one out. When a candidate compares offers, a company that will help them pay off debt and save for retirement stands out as forward-thinking and supportive. A company that ignores this benefit may appear outdated or unsupportive of employees’ financial challenges. In essence, if you don’t offer a student loan match, your competitors might – and they’ll snag the top talent as a result.

Financial Wellness & Productivity: Ripple Effects on Your Workforce

Employee financial wellness isn’t just a “nice to have” – it has real consequences for your business. Skipping the student loan 401(k) match means missing an opportunity to improve your workforce’s financial health.

The result? More stressed, less secure employees, which carries hidden costs in productivity and engagement.

Money troubles are the #1 stress factor for most employees. 57% of workers cite finances as their primary stressor (From Worry to Wellness | Fiducient Advisors | Blog), outranking work itself or health concerns. This stress doesn’t stay at home – it follows people to the office. Stressed employees are distracted employees.

In fact, about one in three workers admits that money worries have negatively impacted their productivity at work (PwC's 2023 Employee Financial Wellness Survey), and on average financially anxious employees spend 8+ hours of work time per month dealing with personal finances (From Worry to Wellness | Fiducient Advisors | Blog). That’s basically one full workday lost per month, per employee due to financial distractions!

By not offering benefits that alleviate financial stress – like the student loan 401(k) match – companies indirectly allow this productivity drain to continue. On the other hand, helping employees chip away at student debt and build retirement savings can reduce their money stress, freeing them to focus better on their jobs.

When employees feel financially supported, they’re more engaged and loyal. It’s hard to put a dollar value on higher morale or a team that’s mentally “all in,” but every manager knows the difference when they see it.

There’s also a long-term ripple effect to consider. Employees who can’t save for retirement (because all their spare income goes to student loans) may end up having to delay retirement. Over 80% of people with student loans have postponed milestones like saving for retirement or buying a home (Attracting and Retaining Talent with Student Loan Repayment Benefits), which means many will hit their 60s with insufficient nest eggs. If your employees postpone retirement because they’re financially unprepared, your company might face an aging workforce with higher salary and healthcare costs.

Studies show that a one-year delay in retirement for a single employee can cost an employer over $50,000 in additional costs (The Real Costs of Employee Financial Stress—and How Employers Can Help - Graystone Consulting - The Robertson Group | Morgan Stanley) (due to higher insurance, pension, and wage expenses compared to a newer hire). Now multiply that by multiple employees working extra years – the costs add up quickly.

In short, an employer that ignores workforce financial wellness today could be paying the price in lower productivity now and higher workforce costs later. Offering a student loan 401(k) match is a proactive way to invest in your team’s financial well-being. It helps employees kill two birds with one stone – tackling debt and growing savings – which pays dividends in focus, loyalty, and eventually the ability to retire on time.

Real-World Example: When Benefits Become a Win-Win

To see these effects in action, let’s look at a real-world example. Abbott Laboratories, a global healthcare company, launched a student loan 401(k) contribution program back in 2018. They recognized many of their young professionals were struggling with student loans and unable to contribute to the 401(k). Abbott’s program allowed employees paying at least 2% of their salary to student loans to receive a 5% 401(k) match, even if they weren’t contributing to the 401(k) directly.

The result? Within a year, over 1,000 employees – from new grads to those in their 40s and 50s – signed up (At the top of HR lists in 2024: 401(k) match on student loan payments).

Participation at that scale proved there was huge demand for this kind of benefit. Abbott also viewed it as a strategic retention move. By helping employees avoid choosing between debt and retirement, they cultivated greater loyalty and goodwill.

Smaller companies have seen similar benefits. For example, companies that partner with student loan benefit providers have reported noticeable drops in turnover. One source noted that employee retention rates can increase by 20% to 40% with a student loan repayment assistance program (4 Ways to Help Employees with Student Loan Debt - Barbara Weltman).

That’s not magic – it’s employees appreciating a benefit that meaningfully improves their lives, and in turn choosing to stay longer. When workers see their employer investing in their future, they’re more likely to invest their future in the employer.

On the other hand, organizations that don’t adapt may find themselves facing stories of “the one that got away.” Think about a talented job candidate who also happens to have $50,000 in student loans. If Company A offers a student loan 401(k) match and Company B doesn’t, it’s easy to guess which offer looks more attractive to that candidate.

You don’t want to be Company B in that scenario. The same goes for current employees: if your high performers start hearing that peers at other firms are getting help with their loans, it could spark retention issues. In a sense, not offering this benefit is now a competitive disadvantage.

The Bottom Line: Can You Afford Not to Offer This Benefit?

When we talk about business costs, it’s easy to focus on the immediate dollars and cents. Offering a new benefit like student loan 401(k) matching might initially look like an added expense or administrative hassle. But as we’ve explored, the hidden costs of not offering this benefit can far outweigh the upfront costs of implementing it.

Higher turnover, difficulty hiring, lower productivity, and delayed retirements all carry significant price tags. These are costs that sneak into your financials in the form of recruitment fees, training time, overtime to cover vacancies, healthcare premiums, and so on.

The SECURE 2.0 Act has made it easier than ever to implement a student loan 401(k) match – essentially letting employees “earn” their 401(k) match by paying off student debt. There’s even a zero-cost way to do it: services like Loan Certify verify employees’ loan payments and handle the administration, so employers can award matches compliant with IRS rules without spending extra budget or adding workload to HR (Loan Certify Capabilities). In other words, the barrier to entry is low, and the upside is high.

So ask yourself: Can your company afford to lose valued employees or miss out on great hires? Can you afford the drag on productivity from a financially stressed team? Can you afford the ballooning costs of an aging workforce that can’t afford to retire?

If the answer is no, then providing a student loan 401(k) match isn’t just a nice gesture – it’s smart business.

Future-Proof Your Talent Strategy

The landscape of employee benefits is changing, and student loan 401(k) matching is emerging as a game-changer for retention and recruitment. Don’t let your company fall behind. To explore how you can implement this benefit effectively (and even at no direct cost to your organization), take the next step:

Download Loan Certify’s Capabilities Deck or White Paper to get deeper insights into the SECURE 2.0 student loan match, real-case success stories, and a roadmap for making it happen in your organization.

Empower your workforce’s financial wellness and secure your talent pipeline – a true win-win for employees and employers alike.