Attracting and retaining Gen Z and Millennial talent in today’s workforce means understanding their financial realities. For many younger employees, balancing student loan payments with saving for retirement feels like a Catch-22. They often ask bluntly: “I’m retiring in 40 years, but I have $80k in student debt now – what can you do for me?”.
The emerging benefit of 401(k) student loan matching directly targets this dilemma, and it’s generating a lot of excitement among those it’s designed to help. This blog delves into survey data, real quotes, and expert insights to reveal how Gen Z and Millennials truly perceive this benefit – and how HR leaders can effectively communicate it.
Many Gen Z and Millennial employees enter the workforce already burdened with student loans, which can significantly impact their financial wellness and delay milestones.
Mountains of student debt are a defining financial burden for today’s early-career professionals. In the U.S., borrowers collectively owe over $1.7 trillion in student loans (worklife.news), with the average household carrying about $55,000 of student deb. It’s no surprise that this debt is taking a toll on young workers’ well-being: 91% of young adults with student loans say financial stress is affecting their mental and physical wellness (stocktitan.net), and student loan debt is a key driver of that stress. In one survey of Gen Z and Millennial borrowers, 70% reported that student loans have forced them to delay important financial moves – from building emergency savings to saving for retirement (bankrate.com).
A particularly troubling impact is on retirement readiness. Juggling loan payments often means sacrificing 401(k) contributions during one’s early career years. According to PwC’s 2023 Employee Financial Wellness survey, 78% of employees with student debt cannot contribute as much to their retirement plans as they would like due to the burden of those loans (corpsyn.com). Similarly, a Morning Consult poll of 18–39 year-old workers found nearly half (46%) said student debt has directly impacted how much they put into retirement savings – with 55% of those individuals stopping 401(k) contributions entirely because of their loans. These figures underscore a painful reality: young people feel forced to choose between paying off debt now or investing in their future. As one HR executive put it, “Employees with student loans often have to choose between paying their school debt and saving for retirement. That’s problematic because people who delay saving will find it hard to catch up."
“I barely made enough to cover my rent and student loan payments. There was nothing left over to save for retirement.” – Mary Moreland, Abbott Laboratories HR EVP, recalling her early career (abbott.com)
This dilemma weighs heavily on financial wellness. Internal research at one company (Guardian Life) found that the remaining employees not participating in the 401(k) plan were predominantly those with student loans, confirming that student debt was the reason they weren’t contributing. “A lot of what we were hearing was that people were laden with student debt,” noted one benefits leader, “For me, the real push was how to help people overcome this burden." Clearly, younger employees are eager for solutions that don’t force them to choose between paying down debt and building a secure financial future.
Given this backdrop, it’s easy to see why financial wellness benefits – especially those addressing student loans – have become highly prized by younger generations. Multiple surveys and studies show that Gen Z and Millennial employees are actively looking to employers for help with their student debt. When the U.S. Supreme Court struck down a federal student loan forgiveness plan in 2023, it “put fuel behind the fire” for private-sector solutions. A Morning Consult survey in late 2023 found an overwhelming 94% of young adults with student loans expressed interest in a 401(k) student loan matching benefit – i.e. getting an employer retirement contribution while they pay off their loans. In other words, virtually all young employees with debt are intrigued by this idea.
Other research echoes that enthusiasm. In a survey by American Student Assistance, 86% of employees said they would commit to a company for five years if the employer helped pay back their student loans (thrivematching.com). Likewise, a SoFi survey found 95% of workers under 30 would be more willing to accept a job offer if it included a student loan repayment perk (justworks.com). These numbers are striking – few other benefits generate that level of eagerness. As a result, offering student loan support can be a powerful differentiator in recruiting. (Yet as of a few years ago, only about 4%–12% of employers offered any form of student loan assistance, meaning those that do offer it stand out significantly.)
It’s not just hypothetical interest – actual workplace programs have yielded measurable boosts in morale and retention. In a 2019 survey of employees whose company offered a student loan repayment plan, 70% said such a benefit made them more likely to stay with their employer. An astounding 97% of employees reported being happier at their job because of the student loan benefit, and 92% felt less stress as a result (mwe.com). More recently, Candidly (a student debt benefits platform) reported that workers who received employer student loan contributions through its platform were 76% less likely to leave their company, indicating major retention upside (businesswire.com). These data points send a clear message: younger employees deeply appreciate and value student-loan-related benefits. Such offerings make them feel supported, improve their day-to-day peace of mind, and engender loyalty to their employer.
Real-world quotes reinforce this sentiment. “I fully anticipate this next generation coming into the workforce to ask about this benefit,” says Molly Beer, a benefits VP at Gallagher, referring to 401(k) loan matching. “The idea that someone doesn’t have to choose between their future and paying off their financial obligations of the past is no doubt exciting.” In other words, eliminating the either/or choice resonates on a personal level with Gen Z and Millennials. It tells them the company “gets it” and wants to invest in their long-term wellbeing. In fact, Abbott Laboratories – an early adopter of a student loan 401(k) benefit – found that some new hires chose to join the company because of this program, and existing employees say the program makes them feel valued. For HR teams focused on retention, it’s powerful to hear that a single benefit can tangibly improve how valued an employee feels.
With such strong demand, it’s worth examining what 401(k) student loan matching actually does – and why it hits the mark for younger employees. This benefit, now enabled for broad adoption by the 2022 SECURE 2.0 Act, allows employers to contribute to an employee’s 401(k) retirement plan when the employee makes a student loan payment. In essence, an employee can continue paying down their student debt, and the company will reward them by depositing a tax-advantaged contribution into their 401(k), just as if they had contributed that amount themselves. It’s effectively a traditional employer match, but keyed to loan payments instead of 401(k) deferrals.
This concept directly solves the dilemma we outlined earlier. Rather than falling behind on retirement savings for years while paying off loans, employees get to do both at once. As personal finance expert Robert Farrington explains, it creates a win-win scenario: “You can make that payment, and you get that money into retirement which will hopefully grow and compound into the future.” It’s literally free money for retirement that young workers would otherwise miss out on.
A Goldman Sachs survey report noted that because Gen Z has competing financial priorities (rent, credit cards, student loans), plan sponsors should consider features like student loan matching to keep this generation on track for retirement. In short, this benefit meets young employees where they are financially, addressing their immediate concern (debt) while also supporting their future security.
Crucially, 401(k) loan matching speaks to values and concerns Gen Z and Millennials often voice: they want to feel financially secure, they want employers to care about their wellbeing, and they value fairness. By helping a new graduate pay off loans and build a nest egg, an employer shows empathy for their situation. “The good news is that employers can help relieve some of this burden with a program like this,” says Mary Moreland of Abbott. The impact isn’t just theoretical.
Abbott’s own Freedom 2 Save program (launched in 2018) is a real-life example often cited as a model. Under Freedom 2 Save, an employee who directs at least 2% of salary to student loan payments gets a 5% 401(k) contribution from Abbott each year. They don’t have to put any money into the 401(k) out of pocket to get that 5% – it’s entirely funded by the company, on top of whatever normal match is offered to those contributing traditionally. This means the employee can “focus on paying down their student loan debt while knowing they’re still saving for the future,” as Abbott’s blueprint describes.
The results from Abbott’s program are telling. Since 2018, over 2,500 employees have enrolled, and as of mid-2023 about 1,300 employees (3.8% of Abbott’s U.S. workforce) were actively using it. The company reports that participants in Freedom 2 Save are 19% more likely to stay at Abbott than their peers – clearly validating it as a retention tool. And some employees have managed to pay off significant portions of their student debt faster than they anticipated, all while accumulating tens of thousands in their 401(k) for the first time. It’s no wonder Abbott is encouraging other employers to adopt similar initiatives and even published a blueprint to help guide them.
Other organizations are following suit. Guardian Life, for example, introduced a student loan 401(k) contribution feature in January 2024 after discovering that even with a 94% overall 401(k) participation rate, the remaining employees not saving were those saddled with student loans. Within months, 100 Guardian employees signed up for the new match program.
And in the broader market, major payroll/benefits providers are rolling out capabilities to support these matches. While it’s early days, experts predict this benefit will become increasingly common in the next few years – “a must-have employee benefit by 2025,” as one analysis in Fast Company put it (fastcompany.com).
From the employee perspective, 401(k) loan matching addresses key concerns in a very tangible way. It acknowledges the reality of heavy student debt and says: “We don’t want you to fall behind on retirement just because you have loans. We’ve got your back.” This aligns with Gen Z’s desire to work for employers who demonstrate empathy and action on financial wellness. It’s also a more equitable approach to 401(k) benefits. In the past, those who could afford to contribute got the full company match, while those struggling with debt often got nothing – essentially a missed benefit.
Now, with loan matching, a wider range of employees can earn those employer contributions. (Notably, the SECURE 2.0 provision even allows loan matches for people paying off family members’ education loans, like a parent who co-signed a child’s loan, which can broaden the appeal across ages.)
For HR and benefits leaders, implementing a 401(k) student loan matching program is only half the battle. How you communicate and frame this benefit internally will determine its success. Here are some actionable strategies to consider:
Start with Empathy and Wellness: Position the benefit as part of your company’s commitment to employees’ financial wellness. Acknowledge in your messaging that “we understand student debt is a major source of stress” and that this program is designed to relieve that stress so employees can focus on their future. For example, share data that money is the top cause of stress for 60% of employees and that financial stress often impacts mental health. By openly recognizing their struggle, you’ll build goodwill and trust. Employees will see the match not just as a financial perk, but as a sign that the company genuinely cares about their well-being.
Highlight the Long-Term Benefit: When announcing or explaining the program, emphasize how it helps employees secure their future without sacrificing the present. Paint a picture of the potential growth: for instance, contributing, say, $200 a month to their 401(k) via the loan match could grow substantially over time thanks to compound interest and investment gains (tax-free). Abbott’s experience shows that over a typical 10-year loan repayment period, an employee could accumulate roughly $48,000 in their 401(k) just from the match, even if they themselves weren’t contributing to the 401(k) out-of-pocket. Framing the benefit in terms of “building wealth for your future self” will resonate with young professionals who worry they’re falling behind on saving. It reinforces that the company is investing in them for the long haul.
Use Real Stories and Testimonials: Nothing drives engagement like real-life impact. If possible, gather a few personal stories from employees (or from leadership) about the struggle of juggling loans and savings. For instance, share an anecdote of a young hire who was “too embarrassed to tell my manager I couldn’t afford to contribute to the 401(k) because of student loans” – a story that many can likely relate to. Then show how the new program changes that equation. If you’ve piloted the benefit, share quotes from participants about what it means to them. (E.g., “I paid down my debt much quicker than expected thanks to our loan matching – and seeing my 401k balance grow at the same time was incredibly encouraging,” said one Abbott employee.) Real voices will make the benefit’s value concrete and combat any skepticism.
Communicate Early and Often: Don’t bury this benefit in a dense policy document or a one-time HR email. Promote it through multiple channels – onboarding sessions, benefit fairs, internal social networks, manager talking points, and reminder emails before each enrollment period. Many employees simply forget about non-medical benefits after open enrollment. In fact, while 70% of HR representatives say their organization offers financial wellness programs, only 48% of employees recall that those programs are available. To avoid this awareness gap, make 401(k) loan matching a regular part of your internal communications. Consider short explainer videos or infographics to illustrate how it works. And because this benefit involves both 401(k) and loan servicers, provide clear instructions on how to enroll and what steps (like verifying student loan payments) are required. Consistent communication will drive uptake.
Address Fairness and Inclusion Proactively: Anticipate questions from employees who don’t have student debt. Some may wonder, “Why can’t my mortgage payments earn a match?” or feel that one group is getting a special perk. It’s important to frame loan matching as filling a gap rather than giving an unfair advantage. Emphasize that it does not take anything away from those who contribute normally to the 401(k) (they still get the regular match); it simply ensures colleagues with student loans can also get a comparable company contribution they would otherwise forfeit. You might explain, for example, “We realized employees with student debt were missing out on thousands of dollars of company matching funds – essentially a penalty for having loans. This program makes our 401(k) plan more inclusive so everyone can build retirement savings.” Also note that if an employee without loans later decides to go to grad school or incurs education debt, they would equally be eligible – so it’s an inclusive benefit over a career lifespan. By addressing these points upfront in FAQs or info sessions, you’ll foster broad support and understanding across all generations at the company.
Reinforce Retention and Values to Leadership: When making the business case internally (to your CFO or leadership team), leverage the compelling data that student loan benefits improve retention and engagement. Remind leaders that employees using such programs are significantly less likely to leave. Highlight that younger staff feel more loyal and “valued” when they see the company investing in their financial security. You can cite examples like Abbott’s 19% retention boost or the 86% of employees who said a student loan repayment benefit would commit them for at least five years. Framing it as a talent investment with real ROI – in the form of higher retention, employer brand enhancement, and even productivity (financially stress-free employees are more focused at work) – will help secure buy-in for offering and expanding the benefit.
By following these steps, HR teams can ensure that a 401(k) student loan matching program is not just offered, but embraced and appreciated by employees. The tone of all communications should be empathetic, encouraging, and inclusive, reinforcing that this is a benefit to help everyone succeed in the long run.
401(k) student loan matching is more than a trendy new benefit – it’s a direct response to what younger employees really think and worry about when it comes to finances. The data and quotes are clear: Gen Z and Millennial workers value this kind of support immensely.
It addresses their number-one stressor, helps close a retirement savings gap, and makes them feel seen and supported by their employer. For HR and benefits leaders, implementing such a program can pay dividends in engagement, loyalty, and talent attraction.
If your organization is exploring 401(k) student loan matching or looking to enhance financial wellness offerings, now is the time to act. By 2025, experts predict this benefit will become a must-have for leading employers.
Don’t wait to catch up – take the lead in alleviating student debt stress for your team and reaping the rewards of a more financially confident workforce.
Download LoanCertify’s latest white paper and capabilities deck to see detailed case studies, plan design tips, and compliance guidance for rolling out a 401(k) student loan matching program.
Empower your employees to pay down debt and build their future at the same time – it’s a benefit that truly resonates with the workforce of today and tomorrow.