A Brighter Future for Employees With Student Loans
Abbott
When millions of Americans resumed paying their student loans in October 2023 after the more than three-year pandemic payment pause, they were given a year-long 'on-ramp' period. During that time, missed payments didn't impact borrowers' credit. Now that the grace period has ended, penalties for missing payments have resumed.
This presents borrowers with a tough choice: They risk hurting their credit score – which can make it harder to obtain a loan in the future – if they don't pay, and they may be forced to drain their savings or stop contributing to their 401(k) if they do.
At Abbott, we've always believed that borrowers shouldn't have to mortgage their future to pay off their education. That's why we created a brand-new program called Freedom 2 Save in 2018.
'While refreshing the company's benefits, we heard from employees about their challenges saving for retirement because of their student loan debt,' said Diego Martinez, DVP, benefits and wellness, Abbott.
The design of Freedom 2 Save was so innovative that Abbott needed special permission from the IRS to even offer it.
'Helping our people build financial security is important to us, so we developed a program that gives people access to retirement savings in two different ways: contribute to your 401(k) and get the company match, or we will contribute for you while you pay down your student loans,' Martinez said.
Under Freedom 2 Save, employees who put at least 2% of their pay toward student loans receive a 5% company contribution to their 401(k). At a time when the national student debt $1.74 trillion and the average borrower has $38,000 in loans, programs like Freedom 2 Save can help employees manage their debt while planning for their future.
Helping Employees Live their Best Lives
Since the launch of the program, more than 3,400 Abbott employees have enrolled in Freedom 2 Save.
Some participants have paid down as much as $60,000 in debt in just a few years. Others have been able to afford a home, pay for their children's education, and help their parents save for retirement thanks to Freedom 2 Save.
'Freedom 2 Save has given me more freedom to spend and save my money how I'd like,' said Kristine Ajpek, engineer, core diagnostics, Abbott. 'I'm paying off my student debt so much faster than I expected that I'm actually considering going to graduate school.'
To date, Abbott has contributed more than $7.7 million to participants' 401(k)s, contributing more than $2 million in 2023 alone. By 2030, we aim to contribute $10 million in matching contributions.
'Freedom 2 Save has been a difference-maker for us,' Martinez said. 'Prospective employees who are job hunting see Freedom 2 Save as an alluring benefit, and current employees say it makes them feel that we care about them as people, not just workers.'
Making Saving for Retirement Available to Everyone
Thanks to a new federal law called the SECURE 2.0 Act, other companies are now eligible to offer this unique benefit to their employees, too.
To help company leaders implement Freedom 2 Save in their own organizations, we developed a free resource called the Freedom 2 Save blueprint. This downloadable tool provides data on why programs like these are important; highlights on the program's impact; and shares considerations for developing, implementing, and measuring the success of a program of your own.
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