Employer 401(k) Matches for Student Debt Repayment: Killing Two Birds with One Stone?

Vanya Horneff, Raimond Maurer and Olivia Mitchell

No 32443, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Almost 50 million Americans are burdened by the need to repay almost $2 trillion in student loan debt, while at the same time having to save for retirement. This article analyzes the potential impact of the 2022 SECURE 2.0 Act reform which permits employers to match contributions for student loan repayments, in 401(k) plans. Our calibrated lifecycle model measures the impact of this reform on heterogeneous households’ financial behavior and welfare. We show that, post-reform, employees will repay more loan debt but reduce own retirement plan contributions, offset by higher employer-matching contributions that take loan repayments into account.

JEL-codes: D14 D91 G11 G22 G51 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-age and nep-ban
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