How the 401(k) Student Loan Match Works

A 401(k) student loan match is an employee benefit that allows your company to make matching retirement contributions based on your student loan payments—even if you aren't contributing to the 401(k) plan yourself.

Instead of requiring payroll deductions to trigger a match, participating employers treat qualified student loan payments as if they were 401(k) contributions. The employer deposits matching funds into the employee's workplace retirement account, such as a 401(k) or 403(b).

If your employer offers the student loan match, your qualified student loan payments may be treated as eligible contributions for purposes of receiving an employer match. Instead of contributing to your 401(k) directly, you make your student loan payments, and your employer contributes the matching funds to your retirement account.  

Here's a practical example: Assume you earn $100,000 per year and made $10,000 in qualified student loan payments throughout the year. If your employer's 401(k) plan provides a 100% match on qualified student loan payments up to the first 5% of your compensation, you'd receive a $5,000 401(k) matching contribution, even if you make no 401(k) contributions yourself. With this benefit, you can make your student loan payments while also receiving matching contributions from your employer in your retirement plan.

While federal rules define how student loan matches work, in general, employers set the specific details of their program. This includes how much they will match, eligibility requirements, vesting schedules, enrollment steps, and the verification process for student loan payments. To find out whether your employer offers this benefit and for details on how it works, see your plan sponsor or administrator.

To receive the 401(k) student loan match, your employer must offer the benefit. The program is optional for employers to adopt and is still a relatively new provision originating from SECURE Act 2.0.

If your employer offers the benefit, you must also have access to an employer-sponsored retirement plan like a 401(k) plan, 457(b) plan, 403(b) plan, SIMPLE IRA or similar workplace plan to receive the match.

Eligible employees must make qualified student loan payments (QSLP). Requirements for QSLPs include terms such as:

• Loan repayments were made by you during the plan year and you have the legal obligation to make those repayments. For example, student loan repayments where you are the borrower or cosigner of the loan would qualify. Student loans where your child or spouse is the only one legally obligated to repay the loan won't qualify.
• The loan was only used for qualified higher education expenses for you, your spouse, or your dependent. This includes tuition, books, room and board, and related supplies based on the school's cost of attendance reduced by scholarships and grants.
• The loan was taken out while the student was enrolled at least half of the time at an eligible educational institution. For example, schools that participate in federal student aid and certain health care facilities that offer post-graduate training programs.

QSLPs are self-certified, but the process will vary from company to company. Most employers will have a process where employers require employees to certify that their student loan payments were qualified. The certification process can include steps like verifying the payment amounts, confirming payment dates, and ensuring the enrolled employee made the student loan payment, etc. See your employer's plan documents for specifics on how your company's certification process works.
 

Many employees—especially twenty-somethings and recent grads—feel forced to choose between paying down their student loans and saving for retirement. A 401(k) student loan match helps reduce that tension by allowing employees to focus on student loan repayment while still receiving valuable employer retirement contributions. By supporting progress on both goals simultaneously, the benefit can ease financial stress and help employees stay engaged with long-term financial planning earlier in their careers.

Employees who delay retirement savings may miss out on receiving their employer 401(k) match. A 401(k) student loan match enables employees to receive employer contributions earlier, giving those contributions more time to potentially grow through compounding.

The IRS limits the amount you can contribute to your retirement plan each year. These contribution limits apply to the combined amount of your 401(k) contributions and qualified student loan payments.

The total amount of elective deferrals (including qualified student loan repayments and 401(k) contributions) can't exceed the IRS annual elective deferral limits of $24,500 for 2026. For those age 50 or over, catch-up amounts do not count towards increasing these limits.

For example, if you contributed $22,000 into your 401(k) for 2026, and you made $10,000 in QSLPs, then only $2,500 of your student loan repayments may be considered for a match.

It depends. Employers will consider the combined total of the elective deferrals and qualified student loan repayments (not exceeding the limits above) for the match.

For example, let's assume that your employer's 401(k) plan provides a 100% match up to the first 5% of your compensation. You earn $100,000 per year and you make $10,000 in qualified student loan payments throughout the year.

• Scenario 1: You contribute $10,000 into your 401(k) for the year, your combined elective deferral is $20,000 ($10,000 deferral plus $10,000 in qualified student loan payments). You'd receive a total employer match of $5,000 (which is 5% of your compensation). In this scenario, counting the student loan payments as part of your elective deferral didn't matter.
   
• Scenario 2: You contribute $2,000 into your 401(k) for the year, your combined elective deferral is $12,000 ($2,000 deferral plus $10,000 in qualified student loan payments). You'd still receive a total employer match of $5,000. In this scenario, the qualified student loan payments helped get the full employer match.

Similar to 401(k) employer matches, student loan matches may also have vesting schedules and requirements that often involve employees staying with a company for a certain amount of time before they are 100% vested. If you leave your job before you're fully vested, you could potentially lose all or some of the employer 401(k) matches.

The student loan 401(k) match program can empower early-career professionals and recent grads that need to focus on their student debt repayment while also making strides toward their retirement savings.

If you have access to a 401(k) student loan match program though your employer and you are struggling to meet your other goals, review your plan documents and the terms and conditions for the program and consider consulting with a financial advisor to assess if the program could be a good fit for you. However, if you can save at least 10-15% of your income (combined with the employer match), consider forgoing the match for qualified student loans. While putting more into your retirement savings may feel like a sacrifice now, in the long run, your future self will thank you for making retirement more attainable.