Products March 6, 2019

Firms Collaborate to Provide Student Loan Benefits and Financial Wellness Education

Gradifi, a provider of student loan and college savings employee benefits, will offer EVERFI’s interactive financial wellness content and tools.

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Gradifi, a provider of student loan and college savings employee benefits, in collaboration with EVERFI, an education technology company, has launched a nationwide initiative to offer financial wellness education as an employee benefit.

EVERFI’s curriculum teaches money management basics about a wide range of topics, including savings accounts, checking accounts, credit cards, credit scores and identify theft. The three-to-10-minute modules also cover personal finance matters, such as budgeting, tax, and financial planning; securing a home mortgage; refinancing student loan debt and saving for education; developing an investment strategy; understanding retirement accounts; and managing risk and insurance.

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Gradifi will offer EVERFI’s interactive content and tools to the more than 700 organizations using any of the following three solutions from Gradifi:

  • Student Loan PayDown, which enables employers to make direct contributions to pay down an employee’s student debt;
  • Gradifi Refi, which gives employees immediate access to leading student loan refinancing lenders with exclusive offers at no cost to the employer;
  • College SaveUp, which facilitates employer contributions to employees’ 529 college savings plans to head off the burden of student debt.

“We’re pleased to be working with EVERFI, which is the gold standard in financial wellness education. Together, we’re helping U.S. employers meet a real need by improving the money management skills of their employees,” says David Chang, CEO of Gradifi.

Gradifi’s initiative with EVERFI is part of a multi-faceted, employer-sponsored approach to educating employees and helping them relieve the burden of student loan debt.

To find more about the EVERFI program, contact Evan Willingham, EVERFI Vice President, Financial Education, 919-971-3415.
Client Service March 6, 2019

Helping Participants Overcome Savings Biases

Starting people off with a deferral rate of 3% is actually a disservice, experts agree.

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If a retirement plan automatically enrolls participants at a 3% deferral rate and does not pair that with automatic escalation, the vast majority of participants stay at that rate, says Nathan Voris, managing director of business strategy at Schwab Retirement Plan Services.

That’s why it is so important for retirement plan advisers to convince their plan sponsor clients to “rethink the 3% deferral rate and pair that with automatic escalation,” Voris says.

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Amy Ouellette, director of retirement services at Betterment for Business, agrees: “A lot of plans use a 3% deferral rate. That provides a mental anchor for people, essentially telling them that this is a good amount to save. For a lot of people, that rate is simply not going to be enough to get them to the retirement they want. Sponsors’ fears about participants’ resistance to higher savings rates are unfounded. A study by Shlomo Bernatzi found that plans with deferral rates as high as 11% have similar opt-out rates as plans with deferral rates of 6%.”

If a sponsor is still uncomfortable starting people off with a 6% deferral rate, “it is important to pair that with yearly automatic escalation until they reach a much higher rate,” Ouellette says.

Yet another 401(k) savings bias is status quo bias, whereby participants who are automatically enrolled take no interest in their retirement savings. This can be countered with “group and one-on-one meetings, which yield some of the best results, timely emails, texts and other communications,” says Patrick Delaney, DCIO retirement insights leader at T. Rowe Price.

It is also important to periodically prompt people to or automatically rebalance their portfolios and consider other options, such as managed accounts, says Mark Riepe, senior vice president at the Schwab Center for Financial Research.

Providing people with retirement calculators that show them their projected monthly income in retirement are also powerful tools that can motivate participants to save more, Ouellette says.

Finally, it is critical to offer people holistic financial wellness programs, Voris says. “People have many competing financial priorities,” he notes. “The average 26-year-old is focused on buying a car or paying down student debt, while a 50-year-old may be trying to save for a child’s college education. Saving for retirement cannot be done in a vacuum.”

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