Student Smothering Savings Julie Tatge Executive Editor & Investments Audience Polling Question

Does your employer currently provide assistance for student ? Julie Tatge 1. Yes Executive Editor 2.PensionsNo & Investments 3. Not yet, but plans to do so in 2019 Audience Polling Question

What do you think is the main reason why assistance would be offered by an employer or within the benefits plan? Julie Tatge 1. To attract employee talent Executive Editor 2. To retain employees 3.PensionsTo reduce financial & Investments stress on employees 4. To meet employee demands for assistance 5. A combination of the above Audience Polling Question

What’s the biggest obstacle for employers when it comes to providing student debt help?

1. Too costly forJulie employer Tatge 2. Too manyExecutive fairness issues Editor – i.e.: Employees with debt shouldn’t receive assistance over other employees with financial strain Pensions & Investments 3. It’s not the employer’s responsibility

4. Compliance reasons

5. I don’t know Terrence Cooney Vice President Blue Cross Blue Shield Association BCBSA’s National Administration (NEBA)

• Voluntary Program for Blue Cross Blue Shield entities • NEBA is Named Fiduciary and Administrator for participating plan sponsors • $13.0 billion of retirement AUM - & 401(k) • 27 - 401(k) plans; 29 non-qualified – Fidelity is record-keeper – 1 master contract; individual participation agreements – $7.7 billion in assets – 88,000 participants • Participating plan sponsors determine their own benefit levels Blue Plans are at various stages of addressing the Student Loan Crisis

EDUCATION REFINANCING MONETARY BENEFITS • Fidelity pilot programs • Contracting with • Stipends and contributions − $40,000/$350 month solution partners • Alternative payment plans • Loan consolidation

MANY ISSUES REMAIN: • Fairness/Discrimination • Benefit Costs/Forecasting • Tax Issues Jodi Epstein Partner Ivins, Phillips & Barker Tax/Benefits Aspects of Paying an Employee’s Student Loan

• Loan repayment amount is income to the employee • Legislation to exclude has been introduced but has not advanced • Some things to consider: – Gross up or not – Review plan definitions of compensation Involving a 401(k) Plan

• Concepts: – Employee makes deferral into plan / employer puts “match” toward student loan – Employee pays student loan / employer puts “match” in plan • Really a non-elective contribution, not a match • Legislation to facilitate this has been discussed but has not advanced • Some things to consider: – If it’s an employer “match” into plan, is it an extra employer contribution or part of existing match? – Interplay with safe harbor designs – Interplay with non-discrimination testing – Procedure to verify loan repayments Will Hansen Senior Vice President, Retirement Policy ERISA Industry Committee (ERIC) Why do Employers Care About Student Loan Programs?

The Problem • 40 million Americans saddled with $1.3 Trillion in student loan debt (Federal Reserve Quarterly Report) • All generations have student loan debt (not just millennials) (Aon Study) • 28% of workers have student loan debt (44% Millennial; 26% Gen X; 13% Baby Boomer)2 • Roughly 50% pay at least $3,000 per year in repayments Legislative Proposals – Student Loans

• Extend Section 127 Tuition Reimbursement Programs to Student Loan Repayment Programs • Allow employer to contribute to retirement plan account of individual based on student loan monthly payment • Defer Social Security start date to receive student loan assistance Asha Srikantiah Vice President, Workplace Investing Emerging Products – Fidelity Student Debt Program Fidelity Investments Why is Student Debt important?

1 MarketWatch, 2016. http://www.marketwatch.com/story/every-second-americans-get-buried-under-another-3055-in-student-loan-debt-2015-06-10 2 Federal Reserve of NY. 3 Fidelity Workplace Investing Participant Panel survey; 2,491 members with 496 responses, as of November 1, 2016. Among Fidelity plan participants

+ Fidelity Workplace Investing Participant Panel survey; 2,491 members with 496 responses, as of November 1, 2016. Opportunity for Sponsors to Differentiate

RECRUITMENT & MODERNIZATION FINANCIAL RETENTION OF BENEFITS WELLNESS 70% 86% 79% Of 2016 graduates Of young workers would Say student loans 1 have student loans commit to their employer for interfere with retirement3 5 years if they helped pay off their student loans2

1 The Wall Street Journal; “Student Debt Is About to Set Another Record, But the Picture Isn’t All Bad,” May 2016. 2 American Student Assistance Young Workers and Student Debt Survey by Regina Corso Consulting. N=502 young workers between the ages of 22 and 33, January 2017. 3 Fidelity Workplace Investing Participant Panel survey; 2,491 members with 496 responses, as of November 1, 2016. Fidelity’s Student Debt Program

Manage, pay down, and minimize student debt

STUDENT DEBT STUDENT EMPLOYER PRE-COLLEGE DEBT TOOL CONTRIBUTION PLANNING Helps employees see all their Student loan benefit employers Targeted education and loans in one place and options can offer to help employees pay resources to help families plan, available for repayment back loans faster save, and pay for college

TEXT TEXT TEXT STUDENTDEBT to 41411 GAMECHANGER to 41411 COLLEGCALC to 41411 to learn more to learn more to learn more

+ Fidelity Workplace Investing Participant Panel survey; 2,491 members with 496 responses, as of November 1, 2016. Additional Information

FOR PLAN SPONSOR AND INVESTMENT PROFFESSIONAL USE ONLY. For use in advisor and 401(k) markets Fidelity Brokerage Services LLC, Member NYSE, SIPC 900 Salem Street, Smithfield, RI 02917 © 2018 FMR LLC. All rights reserved. 836214.1.0 Please take a moment to fill out your evaluation sheet.

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