Fidelity introduced a plan on Thursday that aims to help borrowers stuck in the $1.4 trillion debt cycle pay-off their student loans faster. The average graduate has $34,144 in debt upon graduation, leading employers to try and find ways to help employees repay their student loans.
Student loan repayment programs help employers attract top-tier talent who want to work for a company that helps students pay off their debt faster.
Fidelity Investments will allow employers in their Student Debt Employer Contribution program to make after-tax contributions to an employee’s loans. The program will start later in the year with the goal of reducing student loan debt, and increasing retention and recruitment at companies.
Repayment programs have been slow to be adopted by employers, according to firms in Aon Hewitt’s survey. The survey finds that just 3% of firms are offering some form of student loan repayment assistance.
Fidelity aims to increase this trend.
The survey found that 5% of companies are “likely” to add student debt repayment contributions into their benefits package. Just 24% of firms have “moderate” interest in offering repayment benefits.
Surveys show that 80% of workers would be interested in working for companies that help them pay off their student loans faster.
Contribution programs are customer-driven, according to Fidelity. Debtors are trying to find ways to pay their student loan debt down without having to go through loan consolidation programs or default.
Fidelity found that 24% of people who responded to their survey were over 55 and still had student loan debt. People over 50 are the fastest growing bracket of student loan debtors. These individuals often take out loans for their children, leading to the parent taking on the debt.
People’s ability to save for retirement is also a rising problem, according to Benefit News.
Fidelity will offer a suite of tools to employers that plan to enter the contribution program. The company’s Student Debt Tool helps employers and debtors get a better picture of their current student loan debt.
Personalized plans are provided through the tool that allow the debtor to find ways to lower their current payments or pay off their loans faster. Anyone can borrow this tool to find a way to repay their loans. Fidelity also provides an easy means of understanding how refinancing may help a person’s current student loan payment requirements.
Recordkeeping services will be provided to employers that opt to join the company’s Student Debt Employer Contribution Program.