SoFi presented a financial instrument through which consumers can repay student loans and at the same time save money for retirement.
The division of the company for personal finance SoFi at Work last Thursday, June 8, introduced a student loan verification service. In a sense, this proposal is a response to recent changes in American pension legislation. These adjustments were made within the framework of the Guaranteed Retirement Act, which provides companies with the opportunity to compare payments on student loans of employees with contributions to pension plans under the benefits program.
SoFi’s press release indicates that for organizations that intend to make the most of the changes made to the legislation, the new financial instrument will significantly simplify the process of linking pension contributions with student loan payments.
The new solution helps to use retirement plans through 401(k) or 403(b) contributions while continuing to pay student loan debt. The company’s press release separately draws attention to the fact that the cost of education is increasing in the United States, and the debt on the corresponding loans has more than doubled over the past 20 years. The influence of the price range in the field of education on pension savings was also recorded.
SoFi at Work collaborates with financial groups and registrars for student loan checks. After employers determine the extent to which employees meet the requirements based on student loan debt balances, the firm begins developing a plan, ensuring data security and reporting.
The new tool was launched at a time when student loans are a factor of significant financial pressure on consumers. This problem is of particular relevance for representatives of Generation X.
Currently, the average amount of student loan debt among Generation X in the United States is about 43.5 thousand dollars. Loan repayments account for 8.8% of the disposable income of this age group. According to experts, this trend may in the future lead to the fact that Generation X will be responsible not only for repaying their overdue loans but also for subsidizing the loans of their children.
The Education Data Initiative stated that Gen X bears an exorbitant burden of national student loan debt, which accounts for 39% of the total debt in the country.
Experts say that this problem exists not only in the scale of the economic situation of Generation X. Millennials who have received student loans, as payments resume, may lose 6.5% of their purchasing power, which will affect the retail sector.
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