What Adults Managing Student Debt Should Understand About Retirement Planning

For many adults in the United States, student loan balances and retirement savings often compete for attention. With more than 43 million borrowers still carrying education-related debt—sometimes well into midlife—it’s easy to see why planning for retirement can feel like a secondary priority.

At the same time, surveys show that many Americans, including high‑net‑worth professionals and those in the middle of their careers, worry that they’re falling behind on retirement goals. With February recognized as Financial Aid Awareness Month, it’s an ideal moment to look at how these two priorities can work together instead of against each other.

Whether you’re repaying Parent PLUS loans, tackling your own student debt, or supporting a child’s educational path, understanding how these goals intersect can help you stay on track for the future.

Take Advantage of Employer Options Under the SECURE 2.0 Act

One of the most beneficial updates for borrowers comes from the SECURE 2.0 Act, which allows employers to match qualifying student loan payments with contributions to your workplace retirement plan. If your employer offers this feature, each loan payment you make may trigger a retirement contribution—even if you’re not adding money to your retirement account yourself.

This type of match can help you grow your retirement savings without taking money away from your loan repayment strategy. It also allows your nest egg to benefit from compounding returns earlier, which can be especially valuable for those in the beginning or middle stages of their career.

To learn whether this benefit is available to you, reach out to your HR department or your plan administrator and ask how to enroll.

Be Thoughtful When Making Extra Loan Payments

Paying more than the required minimum on your student loans can be a great way to reduce long‑term interest costs—but only if those additional funds are applied correctly.

Loan servicers frequently default to applying extra payments toward future scheduled payments rather than lowering your principal balance. While this might make you appear ahead on your account, it doesn’t lower the core amount you owe or reduce the interest that accumulates.

To make accelerated repayment truly effective, you must instruct your servicer in writing to apply extra payments directly to the principal. This simple step can shorten your repayment timeline and significantly cut down total interest. If you’re unsure how your payments have been handled, contact your servicer for clarification and keep documentation of your request.

Lower Your Payments Through Retirement Contributions

Borrowers who use an income-driven repayment (IDR) plan may benefit from contributing to a pre‑tax retirement account such as a traditional 401(k), 403(b), or SIMPLE IRA. Because IDR formulas rely on your adjusted gross income (AGI), reducing your AGI through retirement contributions can lead to lower monthly loan payments.

This approach offers two powerful advantages: you increase tax‑deferred retirement savings while decreasing your current student loan obligation. For those working toward Public Service Loan Forgiveness (PSLF) or another long‑term forgiveness program, lowering your AGI may also raise the total amount eventually forgiven.

For RIAs, wealth and retirement advisors, and high‑net‑worth individuals juggling multiple financial objectives, this strategy can create meaningful long‑term benefits.

Consider Long‑Term Forgiveness in Your Overall Plan

If you qualify for a forgiveness program—many of which operate on timelines ranging from 10 to 25 years—aggressively paying down your loans may not always be the most efficient choice. While rapid repayment can feel productive, it may lessen the forgiveness you ultimately receive and strain your ability to invest in retirement.

In many cases, directing more funds toward retirement accounts can reduce your AGI, lower your monthly payments, and increase the portion of your loan that may be forgiven. Meanwhile, your retirement savings continue to grow through tax‑advantaged compounding, helping keep long-term financial security within reach.

Taking time to assess your broader financial picture can help you determine the best balance between loan repayment and retirement investment.

Use Smart Planning to Advance Both Goals

Meeting student loan obligations while saving for retirement doesn’t have to be a choice between one or the other. With thoughtful planning, it’s entirely possible to make progress on both fronts. This might include verifying whether your employer offers a student loan retirement match, ensuring extra payments are applied to the principal, increasing pre‑tax contributions if you’re on an IDR plan, or reviewing your eligibility for forgiveness programs.

A financial advisor can be especially helpful for individuals with complex financial situations or multiple priorities. Professional guidance can clarify tax considerations, highlight planning opportunities, and help you determine the most strategic next steps.

The Takeaway: You Don’t Have to Choose

It’s a common assumption that people must prioritize either student loan repayment or retirement savings, but that’s not the case. Thanks to tools such as the SECURE 2.0 Act, income‑driven repayment, and loan forgiveness options, borrowers have more flexibility than ever.

Financial Aid Awareness Month is a reminder that sound financial education matters at every stage of life. If you're navigating student debt while preparing for retirement, now is a great time to pause, evaluate, and plan for what comes next.

If you’d like support reviewing your financial picture or mapping out your strategy, reach out today. A tailored plan can help lighten your loan burden, strengthen your retirement outlook, and give you greater confidence moving forward.