- New survey by Morning Consult on behalf of Abbott shows student
loans are having a profound and far-reaching impact on young adults
and their planning for the future
- 91% say financial stress is impacting their mental, physical
wellness and student loan debt is a key driver of this financial
- 94% are interested in a workplace benefit in which they get an
employer-provided 401(k) contribution as they pay off their school
- Abbott's new blueprint of its award-winning Freedom 2 Save
program helps companies create a proven student loan benefit
program for their people
PARK, Ill., Oct. 26,
2023 /PRNewswire/ -- Ninety-one percent of young
adults with student loans are so stressed about money they say it's
impacting their physical and mental wellness, according to a new
survey by Morning Consult on behalf of Abbott (NYSE: ABT). A
key driver of that financial stress is student loan debt.
In 2018 Abbott tackled the student debt crisis head-on with its
first-of-its-kind, award-winning Freedom 2 Save program that helps
employees pay off their student loans while also saving for the
Now — with college tuition at a historic high, student loan debt
exceeding $1 trillion and
payments of federal student loans resuming after a more than
three-year pause — Abbott is encouraging other employers to join in
this effort with the launch of the Freedom 2 Save blueprint.
The blueprint guides employers through the process of developing
and implementing a benefit like Freedom 2 Save.
Enacting this type of program will be easier starting in
January 2024, thanks to a new federal
law called the SECURE 2.0 Act, a provision of which was inspired by
Freedom 2 Save. No longer will employers have to receive a private
letter ruling from the IRS like Abbott had to do when creating the
Freedom 2 Save program.
"Employees with student loans often have to choose between
paying their school debt and saving for retirement. That's
problematic because people who delay saving for the future will
find it hard to catch up," said Mary
Moreland, executive vice president, Human Resources, Abbott.
"The good news is that employers can help relieve some of this
burden with a program like Freedom 2 Save. Our blueprint will help
simplify the process."
IMPACT OF STUDENT LOAN DEBT
Tens of millions of U.S.
borrowers collectively owe $1.57
trillion in student loans, making them the third-largest
form of consumer debt after mortgages and auto loans.
This student loan debt is having a profound and far-reaching
impact on young adults, according to the Morning Consult survey of
more than 500 people ages 18-39 with student loans. The data
reinforce the need for workplace programs that help tackle the
student debt crisis.
In fact, 94% of young adults with student debt expressed
interest in an employer-provided 401(k) contribution as they pay
off their school loans.
Other key findings among those surveyed:
- 86% are concerned about having to resume federal student loan
payments this month.
- 63% didn't pay their federal student loans at all during the
- And for 46%, student loans have impacted how much they
contribute to their retirement plans.
Among those whose retirement savings has been impacted by
student loan debt:
- 86% have reduced the amount of money they contribute to their
- 55% stopped contributing to their retirement plan.
- And 44% have withdrawn money from their retirement
"As the number of people with student loans grows, employees
will increasingly be looking for companies to offer student loan
repayment solutions that help them forge their financial futures,"
said Stacey MacPhetres, senior
director, Education Finance, Bright Horizons EdAssist Solutions.
"This is a workplace benefit that employers need to seriously
consider if they want to attract and retain key talent."
AN EMPLOYEE'S PERSPECTIVE
When Cynthia Chan, a supply chain logistics planner
in Abbott's vascular business, was job hunting, Freedom 2 Save was
one of the factors that drew her to the company.
"I accumulated about $15,000 in
student debt after earning my master's degree in chemical
engineering and had no idea how I'd be able to pay my loans and
save money for my future," said Chan. "Freedom 2 Save lifted that
weight off my shoulders. I've paid off nearly $5,000 while also saving for retirement, and can
now see a time in the near future when I'll be free of this debt."
For those who choose to take advantage of Abbott's innovative
program like Chan, here's what it could look like:
Employees who join Abbott in their early 20s with starting
annual pay of $70,000 and take
advantage of this program could see $48,000 accumulate in their 401(k) accounts after
10 years, assuming a 5% annual return and yearly merit pay
increases of 2% — without any 401(k) contribution of their own.
That amount could be worth hundreds of thousands of dollars in
additional retirement savings by age 60.
"Our people have invested a lot in their education, and we don't
want that to keep them from saving while they're still young," said
Moreland. "We encourage other companies to download our blueprint
and join us in this effort. Together we can help employees take on
student loans and savings."
About Freedom 2 Save:
Through Freedom 2 Save,
employees who are eligible for the company's 401(k) and who apply
at least 2% of their eligible salary toward paying down a
qualifying student loan will receive a 5% company contribution into
their Abbott 401(k) annually. Employees don't have to put any money
into their 401(k) to get this company contribution. Abbott was
named to Fortune magazine's 2023 "Change the World" list for
Freedom 2 Save, and the company was recognized by Pensions &
Investments with an Innovation Award for the program. Freedom 2
Save was also featured in an essay in the book "The Future of
Building Wealth: Brief Essays on the Best Ideas to Build Wealth —
for Everyone," published by the Federal Reserve Bank of
St. Louis in partnership with the
Aspen Institute's Financial Security Program.
About the SECURE 2.0 Act:
Thanks to a provision in the
SECURE 2.0 Act that was inspired by Freedom 2 Save, employers will
be able to match student loan payments made by their employees with
tax-advantaged contributions into their retirement accounts
starting in January 2024.
Morning Consult Methodology:
The total sample size was
501 U.S. adults aged 18-39 who have continued with some form of
education after high school, have existing student loan debt and
live in a major U.S. market. The responding sample is weighted to
the profile of the sample definition to provide a representative
reporting sample. Interviews were conducted online in September 2023.
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