Imagine being able to help employees pay off student debt and save for retirement at the same time. Thanks to recent changes in federal law, even small and mid-sized companies can now do exactly that. A new provision from the SECURE 2.0 Act of 2022 allows employers to “match” employees’ student loan payments with contributions to their 401(k) plans (irs.gov). In plain terms, when an employee makes a qualifying student loan payment, the company can put an equivalent employer match into their 401(k) – even if the employee isn’t contributing to the 401(k) out-of-pocket (experian.com). This 401(k) student loan matching benefit took effect on January 1, 2024, and it’s not just for big corporations (humaninterest.com).
Many employees struggle to afford both student loan payments and 401(k) contributions. The SECURE 2.0 Act’s student loan match provision lets small employers help workers tackle both goals at once.
In this post, we’ll demystify how 401(k) student loan matching works under SECURE 2.0 and show that companies of all sizes – yes, even those with under 500 employees – can implement it. We’ll bust the myth that this benefit is only feasible for large firms and explore affordable, low-hassle ways small businesses can roll it out. You’ll also see real examples of smaller employers offering this perk, and we’ll provide a step-by-step checklist to launch a student loan 401(k) match with minimal administrative overhead. Let’s dive in!
401(k) student loan matching is a game-changing benefit that bridges the gap between student debt and retirement savings. Under this program, an employer contributes to an employee’s 401(k) account when the employee makes a student loan payment, treating that loan payment as if it were a 401(k) salary deferral. For example, if an employee pays $300 toward their student loans this month, the company could simultaneously contribute an employer match (say, $300, or an amount following the plan’s match formula) into the employee’s 401(k). The employee doesn’t need to contribute anything out of their paycheck to the 401(k) to get this match – they receive it by paying down their student debt (loancertify.com).
This idea was pioneered by Abbott Laboratories in 2018 and later expanded to all employers by SECURE 2.0. Abbott’s famous Freedom 2 Save program, approved via an IRS ruling, let employees who put at least 2% of their pay toward student loans receive a 5% 401(k) contribution from the company. SECURE 2.0 essentially took Abbott’s concept and made it a lawful option for any 401(k), 403(b), 457(b), or SIMPLE IRA plan starting in 2024 (trinet.com). It defines a “qualified student loan payment” (QSLP) broadly as any debt payment for higher-education expenses, and it permits matching those payments up to the annual IRS retirement contribution limits (e.g. the annual deferral limit, which is $23,500 in 2025 for under-50s) (businessinsider.com). In other words, an employer can contribute on student loan payments just like they would on 401(k) contributions, subject to the same caps.
Why is this so valuable? Put simply, it removes an agonizing choice for workers. Millions of employees – especially Gen Z and Millennials – feel forced to choose between paying off student loans and contributing to their 401(k), because they can’t afford to do both. Traditionally, if a worker didn’t contribute to the 401(k) due to loan burdens, they missed out on the “free money” of any employer matching contributions. That’s a lose-lose: the employee falls behind on retirement savings and forfeits part of their compensation. The new student loan match turns this into a win-win: employees can chip away at their debt while still earning employer retirement contributions. As Walgreens’ HR chief explained when introducing their student loan 401(k) program, workers are “no longer faced with the difficult choice between managing their student loan debt and investing in a secure financial future – now they can confidently do both”.
From an employer’s perspective, this benefit can be a powerful tool to attract and retain talent. Offering help with student loans is highly attractive to younger employees – in one survey, 71% of Gen Z workers said they believe employers should help pay off student debt (napa-net.org). At the same time, 401(k) matching remains a top-three most valued benefit across generations. Student loan matching combines these two priorities, demonstrating you care about employees’ financial well-being in the present and future. Early data from programs already in place are promising: for example, employers using Candidly’s student loan 401(k) match saw a 13.5% increase in first-time retirement plan participation and a 27% jump in employees maximizing their full match (jdsupra.com).
Even more striking, there was a 58% reduction in the likelihood of employee turnover among those participating. In short, helping employees tackle debt while saving for retirement boosts morale and loyalty, and it doesn’t cost much more than a traditional match program.
It’s easy to assume a cutting-edge benefit like this must be complicated or expensive – something only Fortune 500 companies with big HR departments can pull off. In reality, that’s no longer true. Let’s address a few common misconceptions that small and mid-sized employers might have:
“This is only for large companies – we can’t afford it.” In fact, many employers of all sizes are adopting student loan 401(k) matches. One study found that 42% of employers currently offer a student loan 401(k) match, and another 23% plan to in the next couple of years (hrexecutive.com). These aren’t just mega-corporations; they include mid-sized and smaller firms that see the competitive advantage of this benefit. The cost is manageable because the employer match can be structured just like your normal 401(k) match. You’re not paying employees’ loan bills directly – you’re contributing to their 401(k), typically up to the same percentage of salary you might match anyway.
If you already offer a match, it’s essentially redirecting those dollars to reach employees who couldn’t contribute before, rather than an entirely new expense. And if you don’t currently have a 401(k) match, SECURE 2.0 provides incentives (like increased tax credits for starting a plan) to make offering one more affordable. Many small businesses can also offset costs by using plan providers that charge low fees or by having plan fees paid from participants’ accounts (as is common in 401(k) plans).
“It’s too administratively complex for our lean team.” This used to be a valid concern – verifying student loan payments and adjusting contributions sounds tricky. Fortunately, new rules and tools have made administration much easier. The IRS issued detailed guidance in 2024 that gives employers flexible, simple options for verifying loan payments. For example, you can allow employees to self-certify annually that they made qualifying loan payments, with reasonable spot-check procedures. The IRS explicitly said any reasonable method of certification is acceptable, and it outlined options like: no extra paperwork if payments are made through your payroll system, using a third-party service to confirm payments, or having employees submit a form or proof on a set schedule.
In short, you don’t need to scrutinize every payment in-house or become a student loan expert. You can rely on employee attestations or outsource the verification (more on tools for that shortly). The same IRS guidance also provided nondiscrimination testing relief so that offering this feature won’t inadvertently mess up your plan’s compliance testing. That removes a big administrative worry for smaller plans. As one retirement expert noted, with the clear IRS guidelines and flexibility now in place, “now is the time for employers to explore this innovative benefit” because the barriers to implementation have been dramatically lowered.
“What about employees who don’t have student loans? Is it fair?” This is a smart question. You don’t want to offer a benefit that unintentionally leaves out part of your workforce. The good news is 401(k) loan matching is designed to be inclusive. Employers typically continue to offer the regular 401(k) match for anyone contributing directly to the plan, and extend an equivalent match option to those repaying student loans. In fact, the law requires that any employee eligible for the 401(k) can qualify for the student loan match – you can’t pick and choose who gets itplanadviser.com. That means an employee without student debt still gets your standard 401(k) match by contributing in the usual way, while a colleague with loans can earn the same match via loan payments. Everyone has access to the same maximum match; they simply have two paths to get it.
This was exactly how Abbott Laboratories ensured fairness in their program: employees without loans could just contribute 2% to their 401(k) to get the 5% match, so no one was left out (justworks.com). By structuring your plan so that loan payment matches mirror the normal match formula and rules, you keep it equitable for all employees. In practice, most employees will use one route or the other depending on their situation, and everyone ends up with an employer contribution toward retirement.
“We don’t have an in-house benefits team to manage this.” You don’t need one! As we’ll cover next, there are external providers and platforms that handle the heavy lifting. Many small businesses implement their 401(k) (and this new feature) through their existing payroll provider, a Professional Employer Organization (PEO), or a fintech solution that automates the administration. In other words, you can piggyback on someone else’s infrastructure. PEOs like TriNet and Justworks, for example, offer 401(k) plans to their clients as part of a bundled HR service – if you use a PEO, it can amend the 401(k) plan to add student loan matching on your behalf and take care of the compliance and paperwork. TriNet’s team noted that their 401(k) solution helps clients stay compliant with SECURE 2.0 while handling most administrative tasks and even covering setup costs.
In short, your small company could join a larger pooled plan or use a turnkey provider so that they do the administrative work behind the scenes. And if you run a standalone 401(k) plan, there are now software tools and services that plug into your payroll/benefits system to manage the process – which we’ll dive into next.
There are several practical routes for a small or mid-sized employer to offer a student loan 401(k) match without straining your budget or staff. Here are the primary implementation options and tips for each:
Start by talking to your current 401(k) plan provider or payroll company. Chances are, they are already enabling SECURE 2.0 student loan matching features or have it on the roadmap. The retirement industry has moved quickly to support this provision for employers of all sizes. For example, Betterment – a fintech 401(k) platform focused on small businesses – launched the first commercial student loan 401(k) matching product as soon as the law took effect in 2024. Employees using Betterment’s 401(k) can simply log their student loan payments in the platform, and the employer’s match is automatically contributed to their 401(k) accounts. This kind of integrated solution is becoming common.
If you use a major payroll or HR software provider, ask them about student loan match support. ADP, for instance, announced a partnership with student debt platform Summer to help employers administer 401(k) student loan matching easily (prweb.com). ADP’s small-business 401(k) clients can opt in and let Summer handle the verification of loan payments and program administration (meetsummer.comprweb.com). Other payroll providers like Gusto, Paychex, and Paycor are also aware of the SECURE 2.0 changes – if they don’t offer an in-house solution, they may integrate with third-party services that do.
The key is that you likely won’t need to build any custom process; it can be as simple as checking a new option in your plan settings and informing employees how to certify their loans. Always loop in your plan’s recordkeeper or third-party administrator (TPA) – they will help update the plan documents and ensure matches are calculated correctly. According to experts, implementing a student loan match usually involves a straightforward plan amendment and configuring your payroll/401(k) systems to treat certain loan payments as “deemed deferrals” for matching purposes. Your provider’s support will make this seamless.
Tip: When talking to providers, ask how they handle the verification of student loan payments. Do they rely on employee self-attestation, or do they use a tech integration? The IRS has blessed either approach, but you’ll want to know the workflow. Many providers now simply require employees to annually confirm the total student loan payments they made (easy for employees to do online or via a form), and then the employer processes the corresponding match contribution like a year-end true-up. Others might have a more real-time process. Either way, the administrative burden on you as the employer should be minimal once the system is in place.
If your company uses a Professional Employer Organization (PEO) or is considering one, this can be an excellent avenue to offer a student loan match with almost zero extra work on your part. PEOs like TriNet, Justworks, ADP TotalSource, Insperity, and others sponsor retirement plans that their client companies participate in. The PEO handles all the plan administration, compliance, and updates. In the wake of SECURE 2.0, PEOs have been updating their 401(k) offerings to include the new student loan matching capability.
For example, TriNet has advertised that its 401(k) plan can easily accommodate SECURE 2.0 features and help small employers stay compliant. As a small business owner, you would simply inform your PEO you’d like to activate the student loan match feature for your workforce (assuming the plan isn’t already doing it automatically). The PEO’s plan administrators would then take care of the rest – amending the plan, managing the contribution process, and ensuring all regulatory requirements are met.
One big advantage here is economy of scale and cost-sharing. The PEO’s 401(k) is a large pooled plan, so the incremental cost of adding a student loan match feature is spread out. You likely won’t see any significant fee increase for turning it on. And since the PEO is the plan sponsor, they assume much of the fiduciary responsibility and administrative work. Your role is mainly to educate your employees about the benefit and encourage them to certify their student loan payments through whatever mechanism the PEO provides.
If you’re not on a PEO but are part of a similar arrangement (like a Multiple Employer Plan or a pooled employer plan via an industry group or chamber of commerce), ask that plan sponsor about adding the student loan match provision. Given the competitive hiring climate, many are doing so to enhance their benefits packages.
For employers who want to offer the benefit independent of a PEO and whose current 401(k) provider doesn’t have a built-in solution, specialized fintech platforms can fill the gap. These platforms focus on student loan benefit administration – everything from helping employees manage repayment to verifying qualified payments for programs like the 401(k) match. Two notable players are Loan Certify and Candidly (along with others like Summer, FutureFuel, etc.). Here’s how this typically works:
Loan Certify, for example, automates the whole student loan verification process for employers and PEOs (linkedin.com). They enable employees to securely link their student loan accounts or submit proof of payments, and the platform verifies and tracks each qualified payment. Loan Certify then provides the employer (or their payroll/TPA) with the data needed to execute matching contributions accurately. In short, they handle the compliance heavy lifting and record-keeping, so the employer just needs to fund the matching contributions as usual. This removes the headache of chasing down documents or worrying about improper certifications.
Candidly offers a similar solution and has partnered with large recordkeepers like Schwab to provide an integrated experience. In Schwab’s case, Candidly verifies that participants have completed self-certification of their loan payments and passes that info to Schwab’s retirement platform, which then triggers the employer match contributions. The result is a smooth, automated process. Candidly also supplies analytics, so employers can see how many workers have student debt and model the impact of offering a match (pressroom.aboutschwab.com). Even if you’re a smaller employer, you can work with these fintech providers directly or through your 401(k) vendor. They typically charge either a small per-employee fee or a subscription, but the ROI in employee satisfaction can be well worth it.
Other fintechs in this space (such as Summer and FutureFuel/Vault) specialize in student loan assistance and have added modules for the SECURE 2.0 matching. Since ADP’s partnership with Summer shows even big payroll companies trust these solutions, a small employer can be confident that a vetted platform will keep them compliant.
Bottom line: You don’t need to build a new process from scratch. You can use external tools to verify student loan payments and integrate with your payroll/401(k) so that matches happen with little manual intervention. These platforms often provide templates for employee communication and handle the annual notices or any required proof, greatly reducing administrative strain.
Whichever implementation path you choose, success will also depend on effectively communicating the benefit to your team and making it easy for them to participate. Small businesses can excel here with a personal touch. Consider a short launch presentation or an email/Q&A that explains in plain language: “If you’re paying off student loans, our company will help you save for retirement at the same time by matching those payments in your 401(k). Here’s what you need to do to take advantage…”
Spell out the steps for employees: for instance, “log into the portal and certify your loan payments once a quarter” or “fill out this simple form so we know you have student debt and we’ll take care of the rest.” Emphasize that it’s free money they should not leave on the table. Also reassure employees without student loans that the regular 401(k) match is still available to them as usual (so everyone understands they’re valued equally).
Some small employers have found it effective to tie this benefit into a broader financial wellness initiative. For example, you could host a lunch-and-learn on managing student debt and highlight the 401(k) match as a key resource. The more your employees understand it, the more will participate – which amplifies the recruiting and retention benefits for your company.
To make this concrete, let’s look at a few examples of employers (beyond the Fortune 500) implementing 401(k) student loan matching:
Mid-Sized Tech Firm (200 employees): This company leveraged their 401(k) provider’s new capabilities to launch the program in 2024. Using an automated platform, they had 35 employees self-certify student loan payments in the first year and contributed an average $2,500 in matches per participant. Several of those employees had never joined the 401(k) before – now they’re in the plan and on track for retirement savings, all while paying down debt. The HR director noted that it was “virtually no extra work on our end; our provider handled the setup and we just had to educate staff.” The firm has touted this perk in recruiting and saw an uptick in offer acceptances from candidates with student loans.
Small Consulting Agency (50 employees): With a lean HR team, this agency turned to their PEO (Justworks) to implement the student loan match. The PEO’s multiple-employer 401(k) plan added the feature in 2024 at no additional cost. Now, when employees make student loan payments through the PEO’s payroll deduction option, the system automatically records it and triggers the 401(k) contribution. The owner of the agency says even just a handful of employees using it made it worthwhile: “One of our consultants told me this benefit gave her peace of mind – she can finally see her student loan balance go down and watch her retirement account grow. For us as a small business, that’s a big win in keeping her engaged and showing we invest in our people.”
Fintech Startup (80 employees): This startup doesn’t yet turn a profit, but they still rolled out a student loan match because it aligned with their young workforce’s needs. They worked with Loan Certify to administer it. Loan Certify’s platform plugs into their HR system to verify payments. The startup decided to match up to 3% of salary on student loan payments – the same as their normal 401(k) match. In their first year, about 20 employees utilized it, and the company’s cost was only slightly higher than the prior year’s 401(k) match budget (since previously some of those employees weren’t contributing at all). The CEO considers it money well spent: “For a modest increase in our 401(k) contributions, we gained a huge boost in goodwill. Employees without loans weren’t upset because they still get the match by contributing normally. And those with loans are ecstatic that we recognize their situation. It’s helped us stand out as an employer of choice in a competitive talent market.”
These examples mirror what broader surveys are finding: employers of all sizes are jumping on this opportunity now that it’s feasible. In late 2024, Walgreens (with many younger retail employees) announced it will offer a 401(k) student loan match up to 4% of pay starting in 2025 (401kspecialistmag.com). And while Walgreens is huge, it sent a signal that this benefit is becoming mainstream. The ripple effect is reaching smaller organizations too. Industry data from EBRI (Employee Benefit Research Institute) indicates a growing adoption across the board, as noted earlier, with roughly 4 in 10 employers offering it already (hrexecutive.com). The playing field is leveling – small businesses can compete with larger firms by offering a student loan match, and often can implement it just as swiftly thanks to external support.
Ready to get started? Implementing a 401(k) student loan matching program may sound daunting, but breaking it down into steps makes it very attainable. Here’s a practical checklist to guide you:
Gather Stakeholder Buy-In – First, discuss the idea with your leadership team and financial advisors. Highlight the recruitment, retention, and employee wellness benefits, and note that the cost can be controlled similarly to a normal 401(k) match (or by capping the match percentage). Having leadership support and budget alignment is key.
Consult Your 401(k) Provider or PEO – Reach out to your retirement plan provider, third-party administrator, or PEO and let them know you’re interested in adding the SECURE 2.0 student loan match (Section 110) feature. Ask about their capabilities and process: Do they already support it? What plan amendment is required? Can they handle the tracking of loan payments? This step will clarify the implementation path. If your current provider cannot accommodate it, consider partnering with a fintech platform (as in step 4) or even switching to a provider that can – many modern 401(k) platforms for small businesses do, as we’ve seen with Betterment and others (napa-net.org).
Amend the Plan and Set the Rules – With your provider’s help, you’ll update your plan documents to enable matching contributions on qualified student loan payments. Decisions to make (with guidance): Will the match on student loans mirror your existing match formula exactly (recommended for simplicity and fairness)? Will matches be made each pay period or as an annual true-up?
Most small plans opt to keep it simple – same percentage match, same vesting schedule, etc., just expanding the definition of what “counts” toward earning a match. Also decide if you want to require any particular procedures, like using payroll deduction for loan payments or an annual certification deadline. (Tip: leverage the IRS’s flexible rules here – you can keep requirements minimal to encourage participation.)
Choose a Verification Method – Establish how you will verify that employees made the student loan payments they claim. Options (not mutually exclusive) include:
Having employees submit an annual certification form (simple and low-tech).
Integrating a third-party platform (like Loan Certify, Candidly, or Summer) that automates verification and reporting.
Using payroll deduction for student loans, if feasible, so payments are automatically tracked.
For many small businesses, the easiest path is annual self-certification with spot checks or using a third-party service that manages this (often with minimal cost). Decide what works for your team and document the procedure.
Communicate the Benefit to Employees – Roll out the program with clear instructions. Provide a summary of how it works, who is eligible (likely anyone eligible for the 401(k) plan), and what action they need to take to enroll or certify. Use multiple channels: an email announcement, a quick info session, and one-pagers or an intranet FAQ. Emphasize that this is an ongoing benefit – whenever they make loan payments, they can get the match, so they should remain engaged. It’s also wise to train managers or HR contacts to answer basic questions, since this concept will be new to employees.
Launch and Monitor – Go live and start matching those student loan payments! Monitor the first few cycles closely. Ensure that the matching contributions are being allocated correctly to participants’ 401(k) accounts. Your provider or TPA can run reports for this. If you used a vendor platform, review any data or dashboards they provide – for instance, Candidly offers analysis on how the program is impacting your workforce’s savings and even potential turnover reduction. After a couple of months, gather feedback. Are employees finding it easy to certify or use the system? Address any hiccups (sometimes tweaking communication is all that’s needed).
Evaluate and Celebrate – After a year, evaluate the program’s uptake and impact. How many employees benefited? What stories can you share? For example, perhaps a young employee was able to pay off a loan faster and accumulate $3,000 in her 401(k) thanks to the match – that’s a great anecdote to celebrate internally. Recognize participants’ progress (while maintaining privacy as appropriate). This will keep momentum going and show your commitment to employees’ financial wellness. If participation is lower than expected, consider re-promoting the benefit during open enrollment or new hire onboarding.
By following these steps, even a small company with limited HR capacity can successfully implement a student loan 401(k) matching program. The keys are leveraging your partners (provider/PEO or fintech) for the technical pieces and proactively communicating with your team. Once it’s set up, the ongoing administration often runs on autopilot, aside from routine checks – yet the goodwill and loyalty from employees will far exceed the effort expended.
In today’s competitive talent landscape, benefits that genuinely improve employees’ financial lives can set you apart. 401(k) student loan matching is exactly that kind of benefit. It tells current and prospective employees, “We understand your challenges, and we’re investing in your future.” Importantly, SECURE 2.0 made this feasible for the little guys, not just the Googles and Amazons of the world. With the right approach, a 50-person company can offer a benefit that rivals what a Fortune 500 offers – and do so in a cost-effective way. As we’ve discussed, a number of small and mid-sized businesses are already doing it, and many more will in the next year.
If you’re looking to strengthen your benefits package, boost retention, or simply do the right thing for your team, 401(k) student loan matching deserves serious consideration. It’s an emerging trend that might soon become an expected benefit, especially among younger workers. The sooner you implement it, the more you stand out as an innovative, caring employer. And you don’t have to go it alone; partners like PEOs, 401(k) providers, and fintech platforms are available to guide you every step of the way.
To get a deeper understanding of how to launch this program and manage it with minimal hassle, consider tapping into expert resources.
Download Loan Certify’s white paper or capabilities deck to see a detailed breakdown of 401(k) student loan matching and how it can work for your organization.
This free resource will walk you through best practices and help you make this powerful benefit a reality for your small business. Empower your employees to crush their student debt and build retirement security – they’ll thank you, and your company will reap the rewards of a happier, more financially secure workforce.