Voya Financial is the latest 401(k) record keeper to add student loan services for its workplace clients.
The company announced Wednesday that it will offer three student-loan services through Vault, a company that provides student loan guidance and services. The services include options allowing employers to directly pay down student loans or to make 401(k) contributions for employees who are making loan payments. The services also include guidance for workers on how to deal with their college debt, as well as loan refinancing through Splash Financial, according to Voya’s announcement.
Numerous defined-contribution plan record keepers have added student loan help to their lines of services over the past several years, though much of that has been limited to guidance or assistance in refinancing loans. In some cases, employers can make direct payments to employees’ loans, a practice that has been considered a valuable worker-retention tool. Fidelity, which provides student-loan benefits for its employees, has noted that doing so tamped down on turnover.
More recently, student-loan services have been extended to 401(k) contributions:Employers that verify that workers are paying down student loans rather than contributing to their retirement plans can make “matching” contributions to those workers’ 401(k) accounts.
Earlier this month, student-loan provider CommonBond announced a similar service for retirement plans.
“Our research has found that 96% of individuals with student loan debt would be likely or very likely to save more for retirement if they felt like they had their student debt under control,” Charlie Nelson, Voya CEO of retirement and employee benefits, said in a statement. “For many Americans, student debt – for themselves, a spouse or a child – has increasingly become a major roadblock to saving for their future.”
Surveys have shown that many young workers avoid saving for retirement to focus on repaying their student loans. And a majority say they would prefer their employers to help with debt, rather than help them save for retirement.
The Vault Match option “allows employers to match student loan debt payments and make a non-elective contribution into an employee’s qualified retirement plan,” Voya said.
Vault’s clients include New York Life, Ralph Lauren, MasterCard and Pinterest, according to the announcement.
U.S. student loan debt is currently estimated to total more than $1.5 trillion, and about a third of people younger than 30 have college loans, Voya said.
Voya has about 14 million individual and institutional clients in the U.S. and oversees about $603 billion in assets, according to the company.