What employers need to know when considering 529 Savings Plans

Smart organizations are considering Student Loan Assistance programs because they’re aware of the increasing student loan debt burden their employees face and they know it’s highly attractive for hiring and retaining talent with the right offering. If your company is considering this benefit, it’s important to know how traditional employer-sponsored Student Loan Assistance programs stack up against 529 Savings Plans.


Three of the questions we get most often regarding Student Loan Assistance and 529 Savings Plans are:


  1. “Do I need to offer a 529 Savings Plan to be fair to employees without student debt?”
  2. “How do State 529 Savings Plans compare to employer 529 Savings Plans?”
  3. “Will offering a 529 Savings Plan help me with employee hiring and retention?”


“Do I need to offer a 529 Savings Plan to be fair to employees without student debt?”

In short, no, employees will not have the perception you’re unfair if you’re not offering contributions to a 529 Savings Plan. Here’s what we’ve learned from working with hundreds of employers: Employees recognize that not all benefits apply to all people. For example:

  • Younger workers may not choose health benefits because they can stay on their parents’ plan until they are 26.
  • Workers that live in the city may not take advantage of commuter benefits the same way someone living in the suburbs will.


Employers should decide if a benefit they want to offer applies to a strategically important portion of their employee base, then be comfortable and confident that their total benefits package is designed to have the biggest impact overall, but not necessarily be applicable 1:1 to every single employee.


“How do State 529 Savings Plans compare to employer 529 Savings Plans?”

In most cases, the best 529 plan for an employee to use is one that provides income tax relief in their home state. Your state likely offers a 529 Savings Plan. These plans are available to anyone. They allow earnings to grow free from federal taxes and most have minimal expenses to maintain them (some even have zero account fees if certain conditions are met).

As an employer, you can still provide value by educating employees about your state’s 529 Savings Plan and its advantages. This site provides helpful links to 111 different 529 Savings Plans; at least one in every state.



“Will offering a 529 plan help me with employee hiring and retention?”

Unfortunately, there is no evidence or data to support that offering an employer-sponsored 529 Savings Plan will convince an employee to accept a job offer or stay at an organization longer because of the benefit. When the ROI of your benefit offerings is important, you’ll get the most out of a program where your employee receives the value of a benefit directly, rather than the benefit accruing to their child.

Student Loan Assistance programs for employees burdened with student debt, however, have been shown to help companies hire 13 percent faster and retain talent 36 percent longer. These also widen the pool of prospective college-educated talent so companies can make more selective hiring decisions in competitive markets. Types of plans to consider include:


If your organization is ready to help reduce the burden of your employees’ student loan debt and see a measurable hiring and retention impact, get in touch with a member of our Client Solutions team to learn how Peanut Butter Student Loan Assistance can help you achieve your goals.