February 22, 2024

Companies can match employees’ student loan payment to 401k

DENVER — For many people, paying off student loan debt and saving for retirement feels like an impossibility — a new law is giving companies an opportunity to change that. 

The Secure 2.0 Act became law in 2022, but a component of it didn’t take effect until 2024. Section 110 of the law allows companies to match their employees’ student loan payments with a contribution to their 401k or retirement account in exchange.

“The opportunity for companies to provide an opportunity for us to contribute our retirement, is a game changer,” said Candice Smith, the founder of Boss Generation, a nonprofit that addresses the student debt crisis that impacts Black women and women of color through coaching, connections, and resources to thrive.

“There is a wealth gap that persists for Black women, challenges such as the gender pay gap, student debt and lack of funding for our businesses,” Smith explained. 

According to the Education Data Initiative, among all females, Black women have the highest average amount of debt at $29,000. 

Smith hopes this law will help change that. 

“This is just one of the many solutions that I think can be implemented to support Black women,” she explained. “I mean, I think that is monumental and really setting us on a pathway to create economic wellbeing and ultimately generational wealth.”

Businesses like Chipotle have already implemented it. The company is matching up to 4% to employees’ 401k if they make student loan payments. 

In a statement, Daniel Banks, Chipotle’s director of global benefits, said, “We’ve seen a very positive response to our new benefit offering announced last month. Eligible employees throughout the country, including the Denver market, have signed up for Chipotle’s student loan payment / 401K match.” 

It’s unclear how many companies are providing this opportunity, but in addition to Chipotle, Verizon and Abbott are a few businesses that are rolling out this program. 

Smith hopes that given the retention benefit this may have for companies, more of them will implement this opportunity in the future. 

“This is going to create an easier pathway to economic wellbeing and ultimately generational wealth that so many families deserve,” Smith added. 

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