Student Loan Matching for Retirement Plans: How Massachusetts Nonprofits Can Attract and Retain Employees
By Tim Hayes, Financial Advisor for the Public and Not-for-Profit Sector
A new law, the SECURE 2.0 Act, lets employers apply their existing retirement match to employees’ student loan payments. For colleges, hospitals, and major nonprofits, this is a way to attract and retain employees.
Why Student Loan Matching Matters
Your workforce is highly educated — and that comes with significant student debt. Nurses, residents, faculty, and administrators often graduate owing six figures.
Because of that debt, many younger employees skip 403(b) contributions — they can’t afford both. Student loan matching addresses this.
How It Works
The process involves a few steps:
- Employee Certification: Employees report their monthly loan payments through payroll or your retirement plan provider.
- Employer Match Applied: You apply the same match formula you already use. If your plan matches 50% of contributions up to 6% of pay, that same formula applies to loan payments.
- Matching dollars go into the employee’s 403(b) account. The only change is who triggers the contribution.
Compliance
- Student loan matching works within your existing plan rules:
- Nondiscrimination Testing: Set up correctly, this benefit leaves ADP/ACP results unchanged.
- Documentation: Employee certifications are required.
- Since this is a relatively new benefit, keeping good records is essential.
Benefits for Your Organization
Better Plan Participation: More employees in the plan means your match budget is actually being used.
A Recruiting Edge: Younger employees with student debt will notice this benefit.
Cost: The match cost is real, but you are now paying benefits to employees who were getting nothing, which is the point of offering a match in the first place.
Why It Matters for Employees
At a large employer, many employees skip the 403(b) because of student loan debt — missing out on years of investment growth and the chance to contribute to a Roth 403b while they’re in their lowest tax bracket, and on money that has the longest time to grow tax-free. Student loan matching gets them in, they keep paying their loans, and start receiving employer match contributions for the first time.
How to Get Started
Amend Your Plan: Your 403(b) plan document requires a restatement for 2026 — adding student loan matching at the same time is an efficient way to get it done.
Set Up the Workflow: Work with payroll and your retirement plan provider to establish a process for employee payment certification.
Tell Your Employees: Communicate the benefit clearly so employees understand and can use it.
The Bottom Line
Adding student loan matching shows employees you understand their financial realities. For colleges, hospital systems, and large nonprofits recruiting against better-paid employers, this benefit puts your existing match budget to work for employees who would otherwise receive nothing.
Call Tim to confirm your plan’s eligibility: (508) 277-5847
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.