Finance
More employers add 401(k) plan match for those paying student loans
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Companies can now offer their workers a “match” on their student loan payments in the form of a contribution to their 401(k) plan — and a small but growing number of employers are taking advantage.
Traditionally, companies have only paid a 401(k) match to workers based on their voluntary contributions to the workplace retirement plan. A worker choosing to save 3% of their annual pay in a 401(k) might get a 3% match from their employer, for example.
Now, companies can treat a worker’s student loan payments like an elective 401(k) plan contribution.
Federal law allows employers to give a match based on a worker’s payments toward student debt. Workers generally don’t have to contribute to the 401(k) plan to qualify for the funds.
The measure, part of a package of retirement changes dubbed Secure 2.0, kicked in starting in 2024.
Kraft, Workday among companies adding the benefit
The policy’s goal is to help workers tackle two competing financial obligations: paying down debt while simultaneously saving for retirement.
More than 100 companies have implemented the benefit to date, covering almost 1.5 million eligible employees, according to data from Fidelity, the nation’s largest 401(k) plan administrator.
They include “some of the largest firms in the U.S.,” like Kraft, Workday and News Corp., Jesse Moore, senior vice president and head of student debt at Fidelity, explained in an e-mail.
“Many more [are] showing strong interest in offering it in 2025,” Moore said.
About 5% of employers have already added the benefit, according to forthcoming survey results from Alight, one of the largest U.S. retirement-plan administrators.
Another 12% of employers say they are “very likely” to adopt it in 2025, while 29% are “moderately likely” to do so, according to Alight. It polled 122 employers (with 11 million total workers) in September.
Financial help and worker retention
Largely, interest has grown due to Secure 2.0, which allows companies to do it, Rob Austin, head of thought leadership at Alight, said in an e-mail.
Comcast is among the employers adding a student loan-401(k) match benefit next year.
Offering the benefit will help workers “manage their long-term term financial wellness” in a tax-efficient way, said a Comcast spokesperson
About 90,000 U.S. employees are eligible for the match, on up to 6% of their eligible annual earnings, they said.
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Some companies also see the match program as a way to attract and retain college graduates in competitive fields, experts said.
“We’ve heard from many employees that they struggle with student loans,” especially those early in their careers, the Comcast spokesperson said.
“We’re trying to build a value proposition that meets [workers’] needs,” they said.
The student loan measure is also available to companies that sponsor other types of workplace retirement plans, like 403(b) or governmental 457(b) plans or SIMPLE IRAs, according to the Internal Revenue Service.
How the student loan benefit works
The maximum amount of “qualified student loan payments” is generally limited to the annual salary deferral limit, according to Brian Dobbis, retirement solutions lead at Lord Abbett, a money manager. That 401(k) limit is $23,000 in 2024 for workers under age 50.
Here’s a general example: A 30-year-old participates in a 401(k) plan in 2024. The worker chooses to contribute $18,000 in the plan. If they also pay $8,000 toward their student loans that year, only $5,000 ($23,000 minus $18,000) of those repayments is eligible to be matched, Dobbis said.
The worker’s ultimate match amount is dictated by employers’ respective match cap, commonly set around 3% to 6% of a worker’s annual salary.
Of course, companies may structure the benefit somewhat differently from one another.
Companies had the benefit prior to Secure 2.0
Employers had begun offering a 401(k)-linked student loan benefit even before Secure 2.0.
Abbott, a healthcare technology company, has provided a similar benefit since 2018, through its “Freedom 2 Save” program, which was thought to be the first of its kind. The company secured a private letter ruling from the IRS to be able to do so.
More companies have followed since.
In 2022, for example, about 1% of all 401(k) plans were offering or planned to offer a match based on student loan payments, according to an annual survey by the Plan Sponsor Council of America, a trade group. By 2023, that share had increased to about 2%, according to the group’s latest poll, of 709 employers, set to be published this month.
“Pharmaceutical companies are among the earliest adopters, most likely because Abbott pioneered this idea, and competitors followed,” said Austin of Alight.
The share jumped most — to almost 5% in 2023 from 2% in 2022 — among the largest firms, or those with more than 5,000 employees, PSCA found.
It seems there has been “increased interest” among firms with a big cohort of college-educated workers, said Hattie Greenan, PSCA’s research director.
“We will continue to see this number slowly increase as those companies look for ways to differentiate their benefits packages to complete for top talent, and as some of the administrative complexities are worked out,” Greenan said.
Why many firms aren’t adding a student loan match
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However, most companies are still sitting on the sidelines.
For example, 55% of employers say they are “not at all likely” to add the provision in 2025, according to Alight’s survey.
There are a few reasons businesses may not want to implement the measure, and they can vary from company to company, said Ellen Lander, the founder of Renaissance Benefit Advisors Group, based in Pearl River, New York.
None of her clients have yet chosen to adopt it.
For one, employers may already offer a different education benefit to their workforce. Further, companies, especially those with many higher earners, may not feel they need the benefit if there isn’t evidence of lagging 401(k) participation even among those with student debt, she said.
Some employers may already make a non-elective contribution to workers each year (perhaps a profit-sharing contribution), even to workers who don’t participate in the company 401(k), Lander said.
One client also viewed the student loan policy as “unfair,” since it only applied to a certain subset of workers (i.e., those with student debt), Lander said.
“I would hope every client is discussing it with their consultant,” Lander said. “To me, it’s something you should definitely consider. And then you need to get into the weeds: Do you need it?”
Disclosure: Comcast owns CNBC parent NBCUniversal.
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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