Fidelity Investments®, a leading workplace benefits provider and one of the largest and most diversified financial companies in the industry, announced it is working with two Fortune 500 companies, insurance leader The Travelers Companies, Inc. (NYSE: TRV) and U.S. defense contractor Raytheon, to offer their employees a new benefit designed to help eliminate the student debt burden, while also building healthy savings for retirement. Fidelity, which introduced its Student Debt Benefits program in 2018, has increasingly seen companies interested in finding creative ways to help people tackle the student debt problem.
Under the Student Debt: RetirementSM option, employers will allow payments made by eligible employees toward their student loans to qualify for the company's contribution to that person's company 401(k) plan. This means that if an employee is making monthly student loan payments, to help them save for retirement at the same time, an employer contribution will be made into a Fidelity retirement account. Both companies have announced they will start allowing employees to enroll in the program this fall, with the benefit going into effect starting in January 2020.
Student debt has taken on increased urgency, with 45 million borrowers in America owing more than $1.52 trillion in student loan debt; a burden that can significantly impact one's financial priorities, including buying a home, having children and saving for retirement.
Offering a student debt solution has become an important way for plan sponsors to attract and retain top talent and Fidelity has increasingly been working with companies to find innovative ways to introduce a benefit aligned with their employee's unique needs. In addition to the Student Debt: RetirementSM option offered by Raytheon (News - Alert) and Travelers, other options include:
In fact, although Fidelity began administering the student debt benefit to its plan sponsor clients in 2018, it first began offering a program to its own employees in 2016, becoming one of the first companies to help its workforce ease the pressures of student debt. To date, more than 10,000 Fidelity employees have saved $55 million in student loan debt -- $37 million toward principal payments plus an additional $18 million in interest payments -- since the program began, with an average savings of $5,500 per person.
In addition to the money saved, Fidelity internal data also demonstrates the positive impact the program has had on retaining and recruiting talent, including:
Fidelity's Student Debt Program Offers an End-to-End Solution
Student debt isn't a once and done solution, but a problem that can be quite different depending on what stage of life you're in -- whether it's a question of paying off your debt, understanding how much debt you have or saving for your children's education. In addition to the Student Debt Benefits program, which helps solve for the issue of paying off debt, Fidelity's Student Debt Program also provides additional solutions and education, including:
"By adopting a holistic approach, we are helping employers get in the trenches with employees to find ways to pay student debt off faster and hopefully, save money," says Moorjani. "What we have learned this past year is there are a growing number of companies increasingly aware that helping employees take on the issue of student debt can help improve their overall financial wellness, which can in turn have a positive impact from a business perspective in a host of ways."
About Fidelity Investments
Fidelity's mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.7 trillion, including managed assets of $2.8 trillion as of June 30, 2019, we focus on meeting the unique needs of a diverse set of customers: helping more than 30 million people invest their own life savings, 22,000 businesses manage employee benefit programs, as well as providing more than 13,500 financial advisory firms with investment and technology solutions to invest their own clients' money. Privately held for more than 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit www.fidelity.com/about.
Fidelity Investments and Fidelity are registered service marks of FMR LLC.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc.
500 Salem Street, Smithfield, RI 02917
National Financial Services LLC, Member NYSE, SIPC
200 Seaport Boulevard, Boston, MA 02110
© 2019 FMR LLC. All rights reserved.
1 For eligible Fidelity employees from 2015-2018.
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