Student loan benefit provider Goodly has added a new feature to its platform that will help employees manage the cost of higher education: a 529 plan.
These tax-advantaged investment vehicles allow employees to save money for their children’s (or other loved ones’) college education. Through Goodly, employers can make contributions directly to employees'
“We built out support for 529 savings plans because we kept hearing from employers: How do we help employees with student loans today?” Poulin says. “How do we help employees and their families from being saddled with student debt in the future?”
Read More:
It will take the average student loan borrower about 18.5 years to repay their college debt, according to a survey by New York Life. During this time, employees may have to delay other long-term savings goals, like
Read More:
Employees with debt may quickly find themselves in a “vicious cycle,” Poulin says: as they pay off their own loans, their children are getting ready to head off to college.
“One of the nice things about a 529 savings plan for a lot of employees is it can help to break that vicious cycle of student loan debt,” Poulin says. “So if you’re paying off your own student loans until your mid-40s or so, by the time you pay off those loans, a lot of employees who have children getting ready to go off to college will either take out Parent plus loans or even withdraw from the 401(k).”
Maximum contributions that employers can make into a 529 plan vary by state, according to Saving For College, a resource for information on paying for higher education. For example, New York has a $520,000 aggregate limit, while Missouri has a $325,000 aggregate limit.
These accounts can go a long way to
“Employers have recognized this and are proactively seeking to help their employees by offering employer-sponsored payments to 529 savings plans,” Poulin says. “There’s a growing demand from employers looking to differentiate themselves to attract and retain talent with this benefit.”
