- Many Americans feel they have to choose between paying off student loans and saving for retirement.
- SECURE Act 2.0 would allow companies to add money to 401(k) plans for workers as they pay off loans.
- But Congress needs to pass the bipartisan legislation by year end or start over.
Americans saddled with student debt who have trouble saving for retirement could get a major boost, but it’s up to Congress to do its job – and quickly.
Congress has until year-end to pass the SECURE Act 2.0, a package of proposed retirement changes to help Americans save more for retirement. Tucked into the broad package is a measure that would allow employers to count employees’ student loan payments toward their retirement match, effectively increasing retirement contributions for those employees. Currently, companies can only match employee contributions.
Student loans have become a flashpoint, with the Biden administration saying it wants to forgive as much as $20,000 in student debt for qualified individuals to give them a chance to, among other things, save for retirement. Graduates with student loans accumulate 50% less retirement wealth by age 30, according to a 2018 study by the Center for Retirement Research (CRC) at Boston College.
“Interestingly, graduates’ retirement plan assets are not sensitive to the size of their student loans, suggesting that the simple presence of a loan looms large in their financial decision-making,” CRC said.
What is SECURE Act 2.0?
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