Working hard and trying to tackle those student loans? Well, good news! Six new benefits are waiting to make your life a little easier. Whether it’s reducing your interest rates or offering forgiveness programs, these perks are here to save the day. 

Additionally, we are going to share an easy way to keep track of all your existing loans, payment dates, impact on credit score and more.

6 Benefits to Ease Your Student Loans

1. 401(k) Match for Student Loan Repayments

This benefit is for employees prioritizing student loans over contributing to retirement plans like 401(k)s, 403(b)s, or SIMPLE IRAs. Under the Secure Act 2.0, employers can now match those loan payments with contributions to employees’ retirement plans, also known as the  401(k) 

To qualify for the match, a student loan payment must have gone toward a debt an employee incurred for their own qualified higher education expenses, including tuition, fees and room and board. This provision applies to retirement plans that began after December 31, 2023. 

If you are new to the job market or planning to switch jobs, look for companies offering this benefit. And if your existing company is not offering loan-matching provisions, check for other ways, like a stipend, that can help. 

2. 529 rollover to a Roth IRA

A 529 plan serves as an investment tool for families to save money for a loved one’s future education.

There are two main types of 529 plans – Education Savings Plan and Prepaid Tuition Plan. The former acts like an investment account, offering tax perks. Investment choices include exchange-traded or mutual fund portfolios. If you opt for the latter one, you can prepay for college expenses, either with a lump sum, multi-year payments, or fixed monthly instalments.

Usually, states sponsor 529 plans. Withdrawals from these plans are tax-free at the federal level, as long as you use the funds for qualified education expenses such as tuition, books, and accommodation costs.

“Beneficiaries of 529 college savings accounts would be permitted to roll over up to $35,000 over the course of their lifetime from any 529 account in their name to their Roth IRA,” said the new provision’s fact sheet. 

The 529 plan must be under the beneficiary’s name for at least 15 years. Contributions made in the last five years (including earnings), can’t be moved to a Roth IRA. If the beneficiary makes any IRA contributions in a given year, the rollover amount decreases accordingly.

By shifting 529 money into a Roth IRA, you can jumpstart your retirement savings and enjoy a broader range of investment options compared to traditional 529 plans.

3. Penalty-free retirement plan withdrawals. 

Traditionally, early withdrawals from a retirement account can lead to a 10% penalty. However, there are early withdrawal exceptions that let you skip the fine under the Secure Act 2.0. 

This provision offers a lifeline for workers facing unexpected financial emergencies. If there is an unforeseen or pressing personal or family emergency, one can tap into their accounts for up to $1,000 annually to cover these urgent expenses.

Instances in which you can take penalty-free withdrawals from your IRA or 401(k): 

Unreimbursed medical expenses

Health insurance premiums (while unemployed)

Disability

Higher education expenses

First-time home buyers (also includes building or rebuilding home)

Inherit an IRA

To fulfill an IRS levy

Substantial equal periodic payments

Please note: Although you might be exempt from penalties, there may be federal or state taxes that you will have to pay. Consult a tax professional to figure out what works best for you. 

4. Employee emergency savings accounts. 

This provision is like having an emergency fund tucked away in your 401(k) plan. 

Here’s how it works: your employer sets up a special fund within your 401(k) specifically for emergencies, capping annual contributions at $2,500. You can chip into this fund directly, but keep in mind, your contributions are after-tax.

Your employer matches your contributions, but that match goes straight into your retirement savings, not the emergency fund. So, while your contributions to the emergency fund are taxable, the employer match stays tax-deferred until you withdraw it in retirement.

Once you’ve maxed out the emergency fund, you can stop contributing or redirect your contributions to beef up your 401(k) retirement savings. It’s a nifty way to save for both the rainy days and the sunny retirements ahead.

5. The New SAVE plan

The SAVE (Saving on a Valuable Education) plan was started to help federal student loan borrowers in August 2023. The SAVE plan offers borrowers affordable monthly payments on their federal loans and a pathway to eventual student loan forgiveness.

Additional benefits will kick in July this year. It will include undergraduate payment reduction, balance adjustments for those with both types of loans, and accelerated forgiveness for small balances. Also, consolidating loans won’t slow down progress toward forgiveness, and borrowers will still get credit for certain times of deferment and forbearance.

6. The IDR Account Adjustment

The IDR (Income-Driven Repayment) Account Adjustment is a one-time program that allows borrowers to receive credit toward student loan forgiveness under income-driven repayment and Public Service Loan Forgiveness. The Biden administration sent an email to approximately 813,000 longtime federal student loan borrowers’ stating their loans were forgiven.

Also Read: Didn’t Get Student Loan Forgiveness? Other Alternatives To Tackle Student Debt

So there you have it! Six fantastic benefits to give you a helping hand while you juggle work and student loan payments. 

Stay On Top Of Your Credit Score

Now you can check and improve your credit score with Vola’s latest feature: the liabilities management dashboard. 

This handy tool displays all your current loans, payment schedules, and their impact on your credit score. Plus, report eligible payments to credit bureaus and optimize payments to remove negative factors. 

Financial wellness is only a click away. 

Also read: Top Financial Trends of 2024 & How to Ensure Your Financial Wellbeing