Student loan debt can be a burden on individuals’ finances and can impact the level of contributions a 401(k) participant may make. Having a better understanding of this impact and how participants respond to a change in this debt payment status can provide better information for plan sponsors on benefit decisions. Consequently, this study aims to provide better information on how student loan debt payments affect the 401(k) contributions of those who are contributing and what participants do with their contributions when their student loan payment status changes (payments end or start) by looking directly at 401(k) plan recordkeeper data on balances and contributions of active participants linked with banking data from these same participants to see if they are making student loan payments.
- One-fifth of the study sample’s participants had student loan payments in at least one of the three years of this study, while 12.1 percent had them in all three years. However, the likelihood of these participants having student loan payments decreased as the age of the participant increased. The likelihood also decreased as tenure decreased, while it increased with income.
- Among those with incomes less than $55,000, the average employee contribution rate of those making a student loan payment over the three-year period was 5.3 percent compared with 5.7 percent for those not making student loan payments. The difference was larger among those with incomes of $55,000 or more: 6.1 percent with payments vs. 7.3 percent without payments.
- When looking at the resulting balances at the end of the study period by tenure, the average account balances at the end of the study were lower for those who made student loan debt payments than for those who did not make these payments. The differences were particularly pronounced among the participants with incomes of $55,000 or more. For example, among those with tenures of more than five years to 12 years, the average balance for those who made payments was $86,109 vs. $107,687 for those who did not make payments.
- Of the participants who were making student loan debt payments at the beginning of the study period and had stopped by the end of the study, 31.6 percent increased their contribution rate by at least 1 percentage point after the payments had stopped. This share that increased was slightly higher for those with incomes less than $55,000, at 33.3 percent, compared with 30.5 percent for those with incomes of $55,000 or more.
- Making student loan debt payments was found to have a statistically significant negative impact on both the average employee contribution rate and account balance at the end of the study.
The paying of student loan payments had a significant impact on the level of contributions of those contributing. However, some of the impact of the student loan payments appeared to be muted by the existence of employer contributions and default contribution rates of automatic enrollment plans, as the median employee contribution rate for all participants was near the level of the maximum amount matched and/or common default rates. Furthermore, a sizable share of participants adjusted their contributions as their student loan debt obligations outside of the plan changed. Consequently, financial wellness programs can help with contribution and debt payment decisions by considering the total finances of the participant. The change in payment status can also be an important touchpoint in helping to improve the financial wellbeing of participants, as many appear to be making important financial decisions at this time, and better information could improve outcomes.
Figure Figure 713
Figure 2
Figure 5
Figure 11
Average Employee Contributions for Those Making and Not Making
Distribution of Contribution Rates Before Student Loan Debt Payments Stopped,
Fi gure 7, AveragPer e Em cent ploye age e Cont ofr ibut Hou ion seho s forlds Thos W e ith Ma kStud ing and ent N ot Lo M an aking Debt Stude Pay nt men Loan D ts, eb by t P a A yge ments, by Years of
A inc p for Eandno cc y rtm ehe a o esed nt unt ms t onit te ha he s B d or ir alanc a ing ccont count arnd ibut e secu bs ion a la anc nd rria te y te sof , S bon y t d ude a aa tta vle . er ( ant a 5) st g e JP 1 Loan Pa , p $6 MA er,2 M ce 84 nt pra le ov gss e y ide m p tha oint s v e n a nt lua tahose ft sb e le r t w he ins ho ight pa dy id s t mnot e o nt p s ha olic mak yd e m st tahe op kese r ps, b ep da us (yFi m ine ge ur nt ss es. A e10 s, ) ll t a . nd Thi hese fin s sh anc aria e l
S Cram aig C ple ope land is DirA ec vterage or of We Emplo alth Bey ne ee fits Re Con sea tribu rch a tio t tns he E fo mr ploy The ose e Bene Making fit Resea and rch Institute (EBRI). Michael
StudentA Lo verage ans Con an tribu d Reti tion Rate reBefo me re nStud t Pr ent ep Lo aan reDebt dne Pay ss men ts Started,
Stud by ent Increasing Loan Debt or Not Paymen Increasing ts, Figure by Year 4 Con s of tribu Ten tioure ns and and Inco Income me
Tenure and Income ................................................................................................................................. 9
fa t pha rc ofe ttor inc ss s w iona ree arsed e ls , highly b w ut a s sl t he stight a se tisins ly tic highe ight ally s c sirg a nif for nno i cta hose tnt com . (Se w eit e ah inc tA tp he pom e e ndix xpe es lns Fi ess g eur of tha e c3 for n $55,0 onsu m the e00 r cp ,om ra ivtp a 33 le cyt.. e 3 p W ree e g rt rc a ee k ss nt eion r e cv om er ey p su a pr lt re e s.) d c a w ut ition to e h 30.5 nsure
Conr 9.0% ath is the Chief Re Not tirem Making ent StratStud egist a ent nd H Lo eaan d of Debt the Re Pay tirem men ent ts, Insight by s St Inco ratme egy Team for J.P. Morgan
Ultimately, the amount by tha tDecrea a particsing ipant a or Not ccumula Decrea tes in the sing ir 40 1( Con k) atribu ccountio t wns ill band e a m Inco ajor fa me ctor in retirement
Student Loan Payments Each Year Student Loan Payments Some Years
8%
Percentage of Households With Student Loan Debt Payments,
By Craig Copeland, Michael Conrath, Sharon Carson, and Alex Nobile
Single 12.0% -customer households who were ages 65 or younger in 2017 from the Chase data are matched with
1 10 35 0% %
t phe er cceonfide nt for nc those e and wit secu h inc rit om y of es of our $5 ac5,00 count 0 o hold r me or rs’ e. pFor riva tthose e infor wm ho atha ion. d p ayments start after the beginning of the study,
p rFor epA amo ss ree d re tne Ma info ssna , rma ag s t etion m he e nt 40 o. n 1( Sha the k) rEB p on laR n C I/a ha ICI rson is s b 401( ec om a k) Re e P la a tir n p eDat rm im ea a nt b ry aSt ssour er a atnd ecg e is the of t on r find ettir he in em g J.P se fro nt . Mor m inc the om ga n As d ea for tab set Ma a psre iv a se tna e e- H sect ge om ldor e en, nt w S Re oarra kte ir h, res. m Ste Si ent v nc e n e
33.2%
Figure 8, Average Total Contributions for Those Making and Not Making Student Loan Debt Payments, by Years of
by Tenure With Current Employer 7.3%
9.5%
February 8, 2024 • No. 601
participants from the EBRI/ICI 401(k) Plan Database. These single-customer-household participants must have
8.0% 12.8%
25.3 percent reduced their contribution rates by more than 1 percenta 7.7% ge point — 20.9 percent of those with incomes
BassI , ns and ight Cra s St ig rCop ateg ela y n te da , m “40 . A 1( le kx N ) Pla ob n ile As s is e t Vi All ce o cPartion, eside Ac ntc , oRe untt irBa em lae nc nte s Ins , aight nd Lso a an t J.P Activ . Mor ity in ga2020, n Asset Ma ” EBRI na Isg sue em Bri ent e. f Thi no.s
this study focuses on the balances individuals have in their current employer’s plan, the length of time that the
Tenure and Income ................................................................................................................................. 9
17.4%
18.0%
90% 7.4%
7.4%
7%
C Thi os r nc e 30 sea lus % rc ion h pa per was produced through a collaboration between the Emp 7loyee Benefit Research Institute and J.P.
complete data in both datasets in each year from 2017–2019. The 401(k) data only include active participants,
below $55,000 and 29.2 percent of Stud those ent Loaw n P itay h inc ments o m Eae cs of h Year$55,000 o Stud r em nt or Loa en. P ayments Some Years
576, and ICI Research Perspective, vol. 28, no. 11 (November 2022).
partic Iss ipa ue nt B ha ries b f weaes w n w rit itt h th en w eir it h a curss reis nt ta e nc me p loy from er w the ill b Ins e a ti tc ut rit eic ’s r al fa esea ctor rc h a in t nd he ea dcit cor ou ia nt l st ba aff las. A nceny , so vie ac w cs e ount xpr beass lae nc d ein s of
Intro 30duc % tion
3 9.7%
10.0% 8
Morgan Asset Management. J.P. Morgan Asset Management is the brand for the asset managem 6.8% ent business of
Fi Stud gure 9, 7.0% e Avn ert a Lo ge 401( akn ) Ps la an n Balad nc Reti e for Thos re e Ma me king n at nd Pr Not e Ma p king ar St eude dn nte Loa ss n D ebt Payments, by Years of
which will be the focus of the study. The years 2017–2019 were chosen since they are the most recent years
Student loan debt was a growing and significant 18.3% issue for many families prior to the COVID-19 pandemic. While many
this report are those of the author and should not be ascribed to the office 6.1% rs, trustees, or other sponsors of EBRI,
these 80 p% articipants will be presented by tenure level to control for the impact of having had a longer time to accumulate
2
6.4%
See Lucas, Lori, Jack VanDerhei, Kelly H26.8% ahn, Je Oh, and Livia Salonen, “The 3% Difference: What Leads to Higher
26.1%
Student loan debt can be a tremendous burden on individuals’ finances and can impact the level of contributions a
Tenure and Income ............................................................................................................................... 10
JPMorgan Chase & Co. 21.3% and its affiliates worldwide.
befor 6% e the suspension of student loan payments during 6.2%the COVID-19 pandemic, which will be closer to the
student 6 loan payments were suspended during 5.7% the pandemic and an increase of student loan forgiveness has occurred
6.0%
asseE ts. mp W loy he ee n loo Bene king fit Re at sea ther c re h I suns lting titut be a-la Ed nc uc es atb ion a y tenur nd e Re , tsea he ra cv h Fund erage a (E cc Bount RI-E RF) bala , nc ore ts a heir t tst he a ff es. N nd of eitthe her st EB udy RI no werr e
6.0% 6.0%
5.9%
By Craig Copeland, Michael Conrath, Sharon Carson, and Alex Nobile
Retirement Spending?” Employee Benefit Research Institute & J.P. Morgan Asset Management R5.8% esearch Collaboration
5.8%
40 1(k) p 6.a 0% rticipant may make. Having a better understanding of this impact and how participants respond to a change
70%
25% 23.8%
expected environment going forward. This results in App 51 en ,5d 67 ix si 3ngle-customer-household participants for the
si nce, with the resumption o 5.3% f payments in October 2023, their impact on 401(k) plan contributions will resume. Thus,
25%
EBRI-ERF lobbies or takes positions on specific policy proposals. EBRI 29.5% invites comment on this research.
Fi low gur ere for 10 , those Percew nt ho agm e a of de Tho stude se W ntho loa H n d ad eSt btude pay nt m L eoa nts t n D he ab n t for Pa ytm hose ents St who op d id or not Sta r m t a Tha ke tt he Cha se nge pay dm Their ents ( CFi ont gur ribut e 9)ion .
5.4%
available at https://a 5.3% m.jpmorgan.com/us/en/asset-management/adv/insights/retirement-insights/the-3-difference-what-leads-
EBRI is not affiliated with JPMorgan Chase & Co. or any of its affiliates or subsidiaries.
8.0% Appendix Figure 2
in this debt payment status can provide better information for plan sponsors on benefit decisions. SECURE 2.0 allows
7.5% 5.2%
analysis. 5.1%
examining how student loan debt payments impacted 401(k) contributions and participant balances in the past provides
5%
The differRa enc te e s bw y e 1 P re epra cr etnt icula age rly P oint pronounc or Mor ed e , ab m yong Inc om thee p ................................ articipants with incom................................ es of $55,000 or more ...................... . For example, 11
21.6% Figure 10
to-highe 60% r-retirement-savings-rates/; VanDerhei, Jack, and Kelly Hahn, “In Data There Is Truth: Understanding How
5.0%
for many potential changes to 401(k) plans and financial wellbeing programs, including matching contributions to
imp Aor cctoa unt nt inf balor anm cea e tion o nd of n w yearh 2a 0t1 c 9ould =f(ag eha , te pn puern e, a aft vee rr a gte he in c re osu mem , a pvte ion o rage f p ema py lom ye eent cs. ont ributions, average employer contributions,
Percentage of Those WhoA Had T Stu Ade nt G Lo L an A N Deb Ct E Pay ments Stop or Start That
among Su g those gested wit Ci h te tatio nuren s of : Cop me or laend, tha C n ra fiv ig, e Mic yeaha rs t el C o 12 onr ya eta h, rs, t Sha he ron ave Craarg son, e ba a la nd nc e A le fo x N r those obile,w “ho Stude mant de L p oa ay ns m e ant nd s was
Households Actually Support Spending in Retirement,” EBRI Issue Brief, no. 531 (Employee Benefit Research Institute, June
21.7%
20% Average employee contributions=f(age, tenure, average income, average employer contributions,
Fi 40 g1( urke) 11 pla , ns Av fr erom age st Cude ontnt ribut loa ion Ra n debtte p B ae yfor mee nt St s. How udente L voa er, n D maeny bt b Pe ane ymfit ent cha s St nge arts c eda , n r by eD su ec ltr e in a si ang dditor iona Not l e D xpe ecr ns ea esi s,ng and
incidence of student loan payments, outstanding loan balance)
20% 18.2%
50%
Changed Their Contribution Rate by 1 Percentage Point or More, by Income
$86,109 v 4% s. $107,687 for those who did not make payments. This was 20 percent less than for those who did not make
Retirement Preparedness,” EBRI Issue Brief, no. 601 (Employee Benefit Research Institute, February 8, 2024).
24, Appendi 2021) 4.0% ; ax nd Copeland, Craig, Michael Conrath, and Sharon Carson, “How Financial Factors Outside of a 401(k) Plan Can
6.0% incidence of student loan payments)
Student loa Cont n dre ibut bt cion an b s a end a b Inc urd om en o e ................................ n individuals’ finances a ................................ nd can impact the le ................................ vel of contributions a ...................... 401(k) 12
in som Making e st ca ude sesnt , tloa hese n paadyd m ite iona nts ha l expe d ans sie gs nif m icight ant not imp a re csu t olt n th in t ehe le v im el o paf c ct ont thartibut waions s expe ofc tthose ed. contributing, but the
Household Demographics 52.7%
paym 35 e.0% nts. However, 45.7% this percentage declined as the tenure increases, as the balances were 26 percent lower among
Impact Retirement Readiness,” EBRI Issue Brief, no. 591 (Employee Benefit Research Institute, September 7, 2023) for more
16.2% 4.9%
participant may make. Having a be 33.3% tter understanding of this impact and how participants respond to a change in this
De40 pe % ndent Variable: tbal19
impact appeared to be relatively small — about 0.5 percent. However, this can add up over the career of the
The C sio ngle pyr-ig cus htt In ome form r-hous ati eo hold n: Tphis art ic reipa por nt t sis in t cop hiys sa right mep dl eb a y rtehe w id Em ely ploy disete ribut Bene edfit a cRe rosea ss arg ce h I s,ns inc tit om u39.8% te e s(, Ea Bnd RI)t. eY nur ou em s ay
Figure 12, Distribution of Contribution Ra 16.4% tes Before Student Loan Debt Payments Started, by Decreasing or Not
those 1w 53. % it 0% h five years or less of tenure, declining to 9 percent for those with tenures of more than 20 years.
information about the EBRI/JPMorgan Asset Management research collaboration. 13.6%
Depe 3% ndent V31.6% ariable: Avgcont 34.2%
Consequently, this study aims to provide better information on how student loan debt payments affect the 401(k)
debt payment status can provide better information for plan sponsors on benefit decisions. Consequently, this study
participant, as shown in this study by the differe 4.1% nces in average balances between those making student loan vs. those
Appendix Figure 1
30.5%
with th 15e % ir current employer. For example, 11.6 percent were younger than age 30 in 2017, 28.1 percent were ages 40–
copy, D pe rint cre, aor sing dow 15.9% Cont nloa ribut d this ions re a pnd ort Isolely for ncome ................................ personal and noncom ................................ mercial use, provide................................ d that all hard copies ..... reta in 12
3 30 4.0% %
13.3%
contributions of those who are contributing and what participants do with their contributions when their 29.2% student loan
Obviously, student loan payments could impact the decision to not contribute when eligible to do so. However, the dataset is
aims t 30o .0% provide better information on howN st um ude bernt o f loa Obn d serve ab tio t np sa U ym see dnt s a 5ff 1e ,5 c6 t7 the 401(k) contributions of those who are
4
not making payments. Some of the impact of the student loan payments appeared to be muted by the existence of
A 49 m , ong a and ny t 7.8 he and ppa a erll c rtc ic eop ipa nty nt w right e s in t re a ah nd ge e s 60 low othe e –rr65 a inc p (p Fi om lic gur a eb e g le r1) oup not . , ic For tehe s c t he b ont a la aa v nc in ere eas dg w e the e inc rreeom in, low ea e s ove nd r but you r b the y m a at y hr sm ceit a ee lle - yor r e a m q r a uot pre grin. For e io sm d (a 20 ll p ins 17 ot– ra t20 ions nc19 e, )of ,
2.0%
10.0%
Number of Observations Used: 51,567
limited to active participants, so the decision to not contribute is not examined. Further research could look at participation
payment2% status changes (payments end or start). It will accomplish this by looking directly at 401(k) plan recordkeeper
Fi gure 13, Distribution of Contribution Rates Before Student Loan Debt Payments Stopped, by Increasing or Not
contributing and what pa Sr utm icipa mant rys d Sta o tiw stiit ch th s eir contributions when their student loan payment status changes
employ 10e %r contributions and default contribution13.2% rates of automatic enrollment plans, as the median employee
28 am.4 ong p 20 e % t rhose cent ha wit dh te incnur ome es of s of le grss ea ttha er n $40,0 than fiv0 e0 y a end ars t 26 o .4 12 p e yreca ernt s, t ha he d a inc veom rage es of bala 75 nc,00 e for 0 o trhose more w . ho Nem ara lyd e one a - st thir ude d nt
the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing
rates of those with and without student loan payments.
10.1% 25.3%
data on ba Inc lanc ree as a sing nd Cc ont ont ribut ribut ions ions a of nd aIcnc tiv om e p ea ................................ A rtna icipa lysnt is s ofli V nk ae rid a nc wit eh b ................................ anking data from the................................ se same participants t...... o se e13 if
(payments end or start) by looking direM ctely a nat 401( Mk e) d ip an lan recordkeeper data on balances and contributions of active
contribution rate for all participants was near the level of the maximum amount matched and/or common default rates.
25.0% 1.0%
( loa 29n .5 p rp e 10 a qe y uir %r m ce e es E nt nt) w B of RI as $27 t’s p he rpior ,148 ar te icxpress ipa com ntp s ap ha re erd dm w tis eit nur sih $29,1 on. e of For fiv 76 pe e for rym e a is trh si sose ons, or le w p ss ho le , a31 d se id .8 p cnot ont e ra m cce a tnt kE e B ha a RI d p a att y e m nur pe ernt e m s of . isThi sions@e m s or is e a tb 7 p ha ri.or n erfiv g ce .e nt t o low 12e r
Analysis of Variance
2.0%
4
the Th ye aarv ee m raa gk eing andst me ude dint an loa value n psa o yf mthe ent ss. e cA ha thr rac ete e- S riys um etics ar of p ae re riod inc lud wille d b e in M eAp xa eap m neine ndix d t Fi o gd ure ete 1. rm ine if contribution changes
10% 9
1% 20.2% Avgcont 0.063 19.5% 0.050
participants linked with banking data from these same participants to see18.9% if they are making student 18.4% loan payments.
These levels have historically been common anchor points for 5 contributions to 401( 7.3% k) plans. Furthermore, when the
y b Ae a pa la pre nc s, ndix e a.nd Fi 15 gur .7e p1e r ................................ cent had more than 20 ................................ years of tenure. ............................................................................... 15
Sum of Mean
9.2%
5%
20.9%
Source DF Squares Square F Value Pr > F
r esult after stopping and A st vga cro ting ntr paym0 e.nt 03s a 2 nd if st 0.0ude 25 nt loan payments were made in prior years instead of just a
5
5.7%
0.0%
st Th ude e R nt minimum ep loa ort Availabili n pate ym nu ere nt ost ty f a this : t us Thi sof as r mp te he le por p wla to is uld n p a v a ba retila ic thre ipa blee nt on yse a ctha he rs n in int g2019, ee dr, ne one ta a s-t q e w ua ac w h rw te p.e r a rtici b to ri.or one pag nt - thir obs de rv ma ation de cmus hange t ha s t ve o be the en ir an active
Source DF Squares Square F Value Pr > F
0%
20.0%
Mo •d el One-fift 5 h o or le f th ss e stud >y 5 t sa o 12 mple 7’s p >a 12 rt to icipa 25 0.2nt 30 s ha 232E d >1 20 st 4 udent loa 5 or l n p 7.4 e7 sa 1 sy 7m 6E e1 nt 3s in a >5 to 12 t lea 56 st 9 9one . >3 12 8 to of 20the <.0 0 thr 01ee > 20 years of this
Age_HH19 45.7 46.0
A one pp-eyndix ear sn Fig aur psh e ot 2 , ................................ which could miss par................................ ticipants who were ma ................................ king payments in the ................................ year(s) prior to an ana ............... lysis year .16
6.8%
401( c ontr kibut ) pa 0% ion le rticipavnt In ec ls rin ea . T se ehe a d c ch r on eo for trf ibu te he ti, on athre siza e b yle ea No sh rs ia o nr c f e rea the of se d c p sta ud on rttic y ri. bu ipa Th tiont n uss r , the espond me Ind cia ed rea n sa e te d c s t nu on he re triir bu o st ti f othis ude n s nt a mp loale n N o w d in e acs b r ea tmuc ob sed c liga h ont hig trions ibu he tio r ntha outn si d the e of
Model 7 19.95149 2.85021 1170.39 <.0001
0.5% 0%
Error Less Tha 51559 n $55,000 6.75927E14 13109778007 $55,000 or More
Less Than $55,000 $55,000 or More
study, while 12.1 p Tene 19 rc _e 1nt had t1he 1.7 m in all t9 hr .0ee years. However, the likelihood of these participants having
Decreased contribution No decreased contribution Decreased contribution No decreased contribution
o Tabl veralle te o nuf reC oo f nt Ame eric nt as n worLe kesrss Tha , sinc n $e 55 the ,000 participants had to reach three years of te $5nu 5,0re 00 o bre Mo forre e being included in this
tS he tude plan ch nta Loan Pa nged. yment Incidence Figure 9
Err0% or 51559 125.55942 0.00244
Appendix Figure 3 ............................................................................................................................................... 17
The C oE rrm ecp tloy ed T eo et aB l e ne fit Research Instit 51566 ute (EBRI 1). 1a 9nd 895J E.P 15 . Morgan Asset Management are conducting this study as part
student loan paA ym vge in nt cs decrea $sed 66,1 6 a4s the$ a 53 g,e 2 1of 3 the participant increased. The likelihood also decreased as
Less Than 30 30–39 40–49 50–59 60 or Older
Less Than $55,000 $55,000 or More
15.0%
sample. Average 401(k) Plan Balance for Those Making and Not Making
Introd Couc rretc ion ted ................................ Total ................................ 51566 145.510................................ 91 .......................................................... 4
One-fifth of these participants had student loan payments in
Student Loan Payments No Student Loan Payments
2% or Less >2%–6% >6%–10% >10%
of an ongoing joint effort to deliver data-driv Stud en r ent e Lse oan a P rc ay h me to nts better unde No Stur de st na t L nd oanhow Paym t en he ts finF ainc gu ia re l fa 1ctors faced by 401(k)
tbal19 $83,274 $32,467
tenure decreased, while it increased with income.
Under SECURE 2.0, matching contributions to 401(k) plans for those making student loan payments without making
Student Loan Debt Payments, by Years of Tenure and Income
6
at least one Sourc of e: Es the tim atte hr s fro ee m y the e a EBRI/I rs of CI 4 this 01(k ) s Plta udy, w n Databas hil e ae n d12 sel.1 ect Chase data. For more information, see the Data Sources box in the text.
0%
Ano$3 the 00r ,00 w 0ay to control for having a longer time to accumulate assets in the 401(k) plan is to look at the balances by the age
Da ta Sources ................................ Root MSE ................................ 114498................................ DistributioR n ................................ - S o qfu t ah ree Sing 0l .e 43 -C 62ust......................... omer-Househo l4 d
p lan participants outside of their 401(k) plan impact their retirement preparations. Thus, the goal is to provide unique
Source: Estimates from the EBRI/ICI 401(k) Plan Database and select Chase data. For more information, see the Data Sources box in the text.
direct contributions to a plan will be allowed starting in 2024, if the plan adopts this option. This would help participants
Source: Estimates from the EBRI/ICI 401(k) Plan Database and select Chase data. For more information, see the Data Sources box in the text.
SourcSo e: Es urcti em : Es ateti sm fro 5 ate or Les ms th fro R eo m EBRI/I so th t eM EBRI/I CI 4 SE01 CI 4 (k) Pl 01a (k n) Dat Plaa nb Dat asea > a b5 t n ad s e o s 12 e aln ed c 0 t s .Cha 0 el4 ec 9 s t 3 e Cha 5 data se . Fo dar tam . Fo ore r im nfo ore rm > in a 12 fo tiorm n to , a s R 2 ti e0 o - eS n th , q s ee u Dat ea th re a e So Dat ua rc So es0 u brc .o1 x e3 s in 7 b 1 th ox e t in e x th > t.e 20 text.
percent had them in all three years (Figure 1). However, the
10.0%
of the participants. W Dhe epe n nc do entro nt Mll eing an for ages, the result 83274 s are very similar to those fo Ad r j te R-nu Sqre. 0.4362
• Among those with incomes less than $55,000, the average employ Pa er et ic cont ipa rn ibut ts,ion r by K ate e yof Cth hose arac m te ar kiing sticas
fact-based insights to he tlp enc b1 uild a strong 29.e 5r % retirement system by policymakers, plan sponsors, and plan providers.
Sa who mpale re ................................ n’t contributing at the................................ full match level or at ................................ all to their 401(k) plans ................................ to at least receive the ................................ matching . 5
Dependent Mean 0.06308 Adj R-Sq 0.1370
lik elihood of these participants having student loan payments
Source: Estimates fro C mo th ef ef EBRI/I Var CI 401(k) Plan Database a1 n3 d7 s. e4 le9 c4 t Cha 75 se data. For more information, see the Data Sources box in the text.
7 student loan paty em nc e2 nt over the 3 1t.hr 8% ee-year period was 5.3 percent compared with 5.7 percent for those not
For those whose payments stopped, the median increase in the average contribution rates was 2.5 percentage points with a
c ontributions to allow them to build up assets for retirement while they are addressing the expenses of student loan
Coeff Var 78.23530
Household Demographics ....................................................................................................................................... 5
decre $2 a50 se ,00 d 0as the age of the participant increased (Figure 2).
The study starts by examining the share of the participa Figure nts who 8 have student loan payments across age, tenure, and
tenc3 23.1% Age (2017)
making student loan payments. The difference was larger among those with incomes of $55,000 or more: 6.1
median contribution rate of 4.7 percent before the payments Figure stopp3 ed and a median contribution rate of 8.0 percent after the
Figure 12
5.0%
p R ae ym gr ent es s,s w ion A hich ca naly n havs eis a co onsi f C do ernt abr leib im ut paion Rat ct on partic eipa s and A nts’ daycc -to-o dunt ay expe Bala nsesnc . He ow se ver, this feature could
Average Total Contributions for Those Making and Not Making Student
inc Spe om cifiec. aThe lly, 33 con .2 p tribut erce ion r nt of attehs a osnd e young account er t ha ban a la Pa nc rg a e e m s 30 e atre e h r a tE he d s tin cor mater selated with student debt payment status by tenure.
payments stopped. Theset eme ncd 4ians were 1v5irtua .7%lly identical Figure across inc 6 ome Yo u le nv ge elrs t h aa nd n 3nu 0 mber of years observed paying stude 1nt 1.6 %
Percentage of Households With Student Loan Debt Payments, by Income
Student L poa erc n P Dist ent a y w ribu m ite h p nttio a Inc ym n id eof e nt nc s v Co e ................................ s. 7. ntribu 3 petio rcen nt Rat without es ................................ Bef payore mentStu s. dent Lo ................................ an Debt Payments ............................ Started, 5
Parameter Estimates
have an unintended consequence of lowering the contributions of some who are already contributing, as they would
In addition to a cross-sectional examination, regression analysis can be used to see the impact of various factors on the
loans. For those whose payme Lonts an sDebt tarted, Pay the me men P da ia rts, n am de eby c te re r aYear se in s of the a v S Ten e ta ra nd gure e a rcd ontrib and ution Inco rame tes was 2.7 percentage points
student loan debt payments in at least one of the three years 30–39 26.6%
Furthermore, the change sts lain Acv ont erage ribution r 2 To 0.4tal % ates Con aftetribu r paym tio ent ns s a fo rer eTh ithe ose r stop Making ped or st and arted are investigated. Lastly,
by Decreasing or Not Decreasing Contributions and Income
12.0% Student Loan PaymentsP Ea arca hm Ye ear ter Stude S nt ta Lnd oan a P rd ayments Some Years
C now ont rnot ibut b ion Ra e missi teng s aout nd St on ud the ent m La oa tcn P hina gy c m on ent tribut s ................................ ion by not contribut................................ ing. Consequently, em................................ ployers who implement ....... 7
with a median contribution rate of 6.9 percent before the payments started and a median contribution rate of 3.5 percent
contr$2 ibut 0.00 0% ,00 ion 0 rates and account balances, when the hypothesized factors are examined simultaneously to see which
Variable Label DF Estimate Error t Value Pr > |t|
• When looking at the resulting balances at the end of the st 40–49 udy p 11.3% eriod by tenure, the average account balanc 2e 8s .1%
of r egtrhe ess st ion udy a, na wly hil ses e 18 on .2 tlhe p oe aNot r n c ca ont ent Making r ibut of those ion r 25.a 7 Stud at% g ee s a s 40 nd ent –a 49 cLo c ount and an 10 b Debt a.0 la nce Pay s armen e cond ts, uctby ed . Inco me
30%
All Less than $55,000 $55,000 or more All Less than $55,000 $55,000 or more
after Vthe ar12 iy a % bl sta erted. AgaLa in,be the l medians we DF re virtuallE y sitd im entic ateal across incom Er er or levels and numb t Va elr ue of years P ro > b s |te |rved paying
su ch a 100% change should be aware of what could result, which is an area in which financial wellness programs can help by
ones have a statistically significant result. Since both the average contribution rates and account balances can be
Intercept Intercept 1 -137762 2344.25578 10.7% -58.77 <.0001
Account Balances and Student Loan Payments ................................ 50–59 ....................................................................... 25 10 .9%
percent of at tthose he end age of s t60 he or st udy oldew r e hraed low thee se r for pa ytm hose entsw . ho In made student loan debt payments than for those who did not
Contribution Rates and Student Loan Pa 4.9% yments
s tudent loans P.erc entage Increasing Contributions When Student Loan Payments Percentage Reducing Contributions When Student Loan Payments
Intercept Intercept 1 0.01635 0.00104 15.67 <.26.9% 0001
10.4%
considering the total finances of the participant in the contribution and debt payment decisions. The change in payment
considered continuous variables, ordinary least squares (OLS) is used for the analysis. Separate equations a10.1% re
stla 1 -6284.24769 1279.13139 -4.91 <.0001
Variable D Se top fin ped tions 60 or older Started 7.8%
make these payments. The differences were particularly pronounced among the participants with incomes of
contrast, the likelihood of having student loan debt payments
10.5% 9.7%
I Hm av ping ac 90 t % tof o m Sta ak rteing a st aude nd St ntop loa ping n pa St yude ment nt w Loa ould n P baey m expe e 9.7% ntc st ................................ ed to red 9.7% uce the cont................................ ribution rate of a 401(......................... k) plan participant 10 .
8 stl10 a .0% 1 -0.00497 0.00055150 -9.01 <.0001
21.6% 9.6%
$150,000
See Copeland, Craig, “Student Loan Debt: Who Has It and How Much?,” EBRI Issue Brief, no. 524 (January 28, 2021) for a
status can also be an important touchpoint in helping to improve the financial w 9.4% ellbeing of participants, as many appear
estA im gea_tH eH d 1for 9 the A cg ont e fo rribut A Hv Hg io cn r onta — tes a (in1 nd dec tim he a l)a c thc 16.5% e ount 5 t6 h5 re .3 eb 9 -y a 3e 4 la a 5nc r ae ve s. ra ge of e 5m 0.p 9l0 o4 y6 e3 e contributions 1= 1.11 <.0001
9.3%
increa25 sed %$5 w 5,00 ith inc 0 oom r m eor (Fi e. gFor ure e 3) xa , m as p6.9 p le, am eong rcent t hose of those with te witnur h es of more than five years to 12 years, the average
In fact, for the participants having 9.0%to make a student loan payment in at 30.9% least one of the thr 9.0% ee years of the study, the
Age_HH19 Age for HH 1 0.00069856 0.00002177 32.09 <.0001
discussion of the growth of student loan incidence and level of debt held, and see the citations for more research on student
10%
23.1% 8.8%
Re to g br ee m ssa ion An king im aly psi or s of tantC fin ona t8.7% rnc ibut ial ion Ra decision tes a s a nd t thi Ac s t coun imet, B aa nd lanc beets te ................................ r information could im ................................ prove outcomes. .............. 13
TeDa n19So _t1a urc eS : Es otiur mateces s from the EBRI/ICI 401(k) 1 Plan Database a 4 n7 d8 s7 el.e3 c4 t Cha 341 se data. For more5 i8 nfo .9 rm 55 ati 3 o9 n, see the Data So8 u1 rc.e2 s0 box in the te < x.t.0001
Income (Average 2017–2019)
emplo8.5% yee contributions/(contributions+gross income) for each year
80% 9.4% 18.5%
balance for those who made payments was $86,109 vs. $107,687 for those who did not make payments.
inc omes of less than $40,000 had payments in each of the
loan debt.
avera teg ne c 4contribution r 8.2%ate over the thre1e-year study p -0.e 0r 0io 36 d8 was lower 0 t.ha 00n 07fo 29r6 t 3hose not -5.0 m 4 aking a