Two-thirds of employees say student loan repayments will derail retirement plans

COLUMBUS, Ohio, Sept. 27, 2023 ~ As the resumption of student loan payments looms in October, employees of all ages are feeling the financial pressure. A survey conducted by the Nationwide Retirement Institute® has revealed that 12% of employees aged 45 and over have student loan debt, and most of them (61%) agree that the reinstatement of payments has had a negative impact on their financial stability and long-term planning.

Two-thirds (66%) of those surveyed also agree that repayments will significantly affect their ability to save for retirement. To manage upcoming repayments, many are taking steps which could be detrimental to their long-term financial strategy. 29% are planning to adjust their retirement plan contributions in order to keep up with their student loan payments, while 18% have already done so. 49% are reconsidering the feasibility of their retirement goals in light of their student loan debt, and 59% are considering additional sources of income or side gigs to offset the financial strain caused by student loan payments and maintain their retirement savings contributions.

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The potential for nearly 17 million older Americans making financial decisions as a result of student loan payment resumption is concerning. 85% of employees ages 45+ with student loan debt would be interested if their employer offered a match to their loan repayments for retirement savings, yet only 16% have sought professional advice to determine the best course of action in managing both their student loan payments and retirement savings.

Eric Stevenson, President of Nationwide Retirement Solutions commented: "It's impossible to ignore the long-term financial impact student loan repayments can have on employees across all generations. The good news is SECURE 2.0 Act now allows employers to provide matching retirement plan contributions based on the amount of an employee's student debt repayments — a provision Nationwide advocated for and is excited to further innovate on." He added: "Between student loans, interest rate increases and inflation, employees have a lot to navigate when planning for retirement. There is a strong business imperative for employers to help."

Employees are increasingly concerned about their financial futures – but employers can help by offering support such as matching contributions towards employee's student loans or providing access to professional advice on how best manage both repayment plans and saving for retirement.

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