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Betterment adds new student loan, 529 college savings features to its 401(k) business

MoMo Productions

Today’s workers are often tasked with juggling multiple financial goals.

Between saving for retirement, paying off student debt and planning for your own children’s education, it can be difficult to know whether you are on track.

Betterment is taking steps to try to make it easier for employers to help workers manage those priorities with the addition of two new offerings focused on student loans and 529 college savings plans.

Betterment at Work, which provides 401(k) plans to employers with anywhere from two to 1,000 employees, is adding new tools that companies can opt to provide alongside their 401(k) plans.

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The first is a student loan feature that will let workers access information on the various debts they may have through different providers in one location. Additionally, it will help them evaluate which balances to pay down first, see repayment projections and track their participation in student loan matching programs, if their employers offer them.

“It’s a barrier to entry to a 401(k) and to retirement savings, in general,” Kristen Carlisle, general manager of Betterment at Work, said of having student loan debt.

“People are focused on paying off loans and feel as if they can’t take full advantage of other benefits that their employers are offering,” she said.

Betterment is offering the student loan feature in partnership with a company named Spinwheel, which provides debt programs that can be embedded into apps or services.

People are not just looking at compensation as their base salary anymore.
Kristen Carlisle
general manager of Betterment at Work

Separately, Betterment is also adding a 529 feature that will allow workers to see how investing pre-tax money toward these plans will shape up over time and in comparison to their other goals.

That addition comes as Betterment has entered into an agreement to acquire a company named Gradvisor, a provider of personalized college savings plans.

Employers may opt to either take on the cost of the benefits or share it among their employees.

Betterment’s expanded platform comes as the pandemic has made financial wellness a challenge for many workers. At the same time, many employers are looking to expand their benefits in an effort to recruit and retain talent.

“People are not just looking at compensation as their base salary anymore,” Carlisle said.

“People are really thinking about ‘what are you offering me in terms of the other benefits that help me achieve my goals and manage my life?'” she said.

A survey conducted by PwC last year found 63% of employees have experienced greater financial stress since the pandemic began. Younger generations are feeling the brunt, with 72% of millennials and 68% of Gen Z reporting higher levels of financial pressure, compared to 62% of Gen X and 46% of baby boomers.

The survey also found 87% of employees want their employers to provide them with help with their personal finances.

That’s as another survey conducted by TIAA found that just 22% of people ages 18 and up give themselves high scores — a 9 or 10 out of 10 —on financial wellness.

Meanwhile, 21% of respondents gave themselves the lowest scores of 1 to 4 out of 10.

Those who are most likely to feel confident about their finances include men and wealthy, older and retired individuals.

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