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No more choosing. This corporate benefit lets you save and pay off your student loans.

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SANTA CLARA, Calif. (Circa)—Slapped with high interest student loans, millennials are increasingly pressured to face a daunting ultimatum: either pay off college debt or save for retirement.

"There has been some research that shows that by the age of 30, those that have student loan debt save less than those that do not have student loan debt for retirement," said Chatrane Birbal, the director of Congressional affairs for health and employee benefits policy at the Society of Human Resources Management (SHRM). "That's directly because many younger or millennial employees are focused their efforts on repaying student loan debt because, as we all know, millennials are thinking retirement is very far away."

Nearly 44 million Americans owe $1.5 trillion in student loan debt, according to the Federal Reserve. While these statistics may not be anything new, they are beginning to raise concerns for employers who are looking to recruit and retain young talent.

"As a result of that, many employers are expanding their benefit offerings to provide more financial incentives for employees to save for retirement, but also to help or assist employees in repaying student loan debt crisis," Birbal told Circa.

Student debt poll

Abbott, a heath care company with more than 99,000 employees, recently launched "Freedom 2 Save," an unprecedented benefits package program meant to eradicate the ultimatum so many millennials face. Mary Moreland, the divisional vice president of compensation and benefits at Abbott, explained that as long as employees contribute two percent of their income to paying off their student loan debt, the company will "match," or distribute, 5 percent of their pay into their 401k plan as a pre-tax contribution.

"Freedom 2 Save is a great example of [Abbott] thinking about, 'what are the issues that our employees are grappling with and how can we come up with an innovative way to address them?'" Moreland added.

David Guan, a global product manager at Abbott, has accumulated more than $100,000 in student debt and was one of the first employees to enroll in the "Freedom 2 Save" program when it launched in August. After obtaining his MBA at Stanford University, he says he faced a series of tough questions while evaluating his personal finances.

"Should I pay off my debt early? Save some money in the long run? Or should I stretch it out and perhaps plan for a longer payoff period?" he said.

Those looming concerns were lifted after he signed up for the program.

"It helps me think about the future as opposed to really looking back at past debts, so to speak," Guan added. "Helps me focus on driving forward. If nothing else, helps me focus on doing my job as a product manager, which is really to bring life-changing technologies and true innovation in the med space to patients who actually need it the most."

Paige Jones, a communications specialist at Abbott, says she has a "considerable amount of debt," but the "Freedom 2 Save" program will likely help her shorten her student loan payment plan.

"Being able to pay off these loans as fast as I can, pay as little interest as possible, is really something that's going to just kind of change the way that I view my budget, and honestly, the way that I'm able to kind of live my life as a young adult, and then moving forward," she said.

The implementation of the "Freedom 2 Save" program at Abbott involved a series of calculated steps dating back to 2016 when the idea was initially conceived, Moreland said. However, because, to her knowledge, no other company in the U.S. attempted to provide such a benefits package to their employees, company executives filed a request to the IRS in 2017 to ensure the program's legality under the U.S. tax code. Soon after, in 2018, the IRS approved the program, allowing Abbott to move forward with the benefits package.

In just a few weeks, Moreland said a few hundred people enrolled in the program, with thousands more expected.

"As I've looked at the people who are starting to sign up, it's definitely people in the first one, two, three years of their career," she said. "We had some others, but for the most part, it's really those who are fresh out of school. So I think this will be a great recruiting tool for us, and we certainly plan to share it with those who we're trying to recruit."

This recruiting method could have a large impact on the U.S. labor market, since, according to the Pew Research Center, millennials are the largest generation in the labor force.

Some companies have already began to recognize the needs of the millennial workforce. A small, but growing, number of employers, such as Fidelity Investments and Staples, offer student loan repayment benefits to their employees, according to the latest survey from the Society for Human Resource Management.

But it's Abbott's "Freedom 2 Save" program that has forced other large employers to reevaluate their benefits packages. After the IRS issued a private ruling granting Abbott to move forward, the ERISA Industry Committee, a national association that advocates for large employers on health, retirement and compensation, requested the IRS to broaden the scope of the previous ruling so its members could launch similar programs.

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