State of Student Loans: Why Employers are Key

Abbott's head of HR shares how the company is helping employees tackle student debt and save for retirement.

Strategy and Strength|Oct.26, 2023

With student debt top of mind among loan holders and lawmakers, experts in the student loan industry recently convened in Washington, D.C. to discuss the state of student debt and what’s next.

Joining in the conversation was Mary Moreland, executive vice president, Human Resources, Abbott, who said employers play a key role in helping their people tackle student debt and save for the future.

It’s a topic Abbott knows well, having created a first-of-its-kind program that helps employees pay off their loans while also saving for retirement: Freedom 2 Save. Since the program’s 2018 launch, more than 2,500 employees have enrolled, and Abbott has contributed more than $5.5 million to participants’ 401(k)s.

“The employer space is complicated when it comes to student loans. Full stop,” Moreland said during the keynote panel at the recent Education Finance & Loan Symposium.

“Some companies give borrowers money directly. What we chose to do was create two doors into a 401(k) contribution. You can put 2% into your 401(k) or 2% toward your student loans and in both cases get the company’s 5% contribution.”

Implementing similar employee programs is expected to get easier in 2024 thanks to the new federal law SECURE 2.0 Act, a provision of which was inspired by Freedom 2 Save.

But what won’t change — at least not anytime soon — is the nation’s trillion-dollar student loan dilemma and the tens of millions of people faced with paying back that debt.

Read on for key takeaways from the symposium on the state of student loans:

  1. U.S. Student Debt is Staggering
    Student loans are the third-largest form of consumer debt after mortgages and auto loans in the U.S. There are approximately 45 million borrowers1 holding a total of $1.57 trillion in debt,2 the vast majority of which are federal student loans.

  2. Expect Confusion When the Loan Repayment Pause Lifts
    Federal student loan borrowers didn’t have to pay their loans for more than three years. The reprieve was enacted to help people weather the economic uncertainty of the pandemic. This payment pause ended in October, meaning tens of millions of people now have to start repaying their student loans.

    “If you didn’t have to make a payment for three years, you might have reallocated that money to somewhere else in your budget,” said Grant Carwile, a symposium panelist and managing director of SL Capital Strategies, a financial advisory services firm.

  3. Debt Burden Disparities May be Widening
    Despite the pause, some borrowers opted to continue paying their loans to take advantage of the unprecedented temporary 0% student loan interest rate.

    “It’s the borrower profile you’d expect: those with graduate loans and higher incomes,” said Dubravka Ritter, a symposium panelist and senior advisor and research fellow at the Consumer Finance Institute, Federal Reserve Bank of Philadelphia.

    The result may be a widening of debt burden disparities between those who could afford to pay their loans during the pandemic and those who couldn’t, Dubravka said.

  4. Employers Can and Should Take Action
    Starting in January 2024, the SECURE Act will enable companies to match student loan payments made by their employees with contributions into their retirement accounts.

    “It’s time for employers to take advantage of this opportunity,” Moreland said. “Helping employees pay down their student loan debt is good for the employees and for the employers. Freedom 2 Save has helped us attract and retain some of the best and brightest workers. This is particularly important now in this competitive job market.”

Learn more about Abbott’s Freedom 2 Save program.


1 The White House. "Fact Sheet: President Biden Announces Student Loan Relief for Borrowers Who Need It Most." August 24, 2022.
2 Federal Reserve Bank of New York. “Total Household Debt Reaches $17.06 Trillion in Q2 2023; Credit Card Debt Exceeds $1 Trillion"


This story was originally published on May 26, 2023, and updated on October 26, 2023.