What Adults Managing Student Loans Should Understand About Retirement Planning

For many adults in the United States, student loan repayment and retirement planning represent two of the biggest financial hurdles they face. More than 43 million borrowers still carry student loan balances, and many continue paying well into midlife or beyond. With that level of long-term debt, it’s easy to see why saving for retirement often gets pushed to the background.

At the same time, large numbers of Americans report feeling unprepared for retirement—particularly high‑net‑worth (HNW) individuals, mid‑career professionals, and earners juggling several financial responsibilities at once. As we recognize Financial Aid Awareness Month this February, it’s a meaningful opportunity to look closely at how borrowers can balance these priorities and how thoughtful planning can create space for both goals.

Whether you're paying down Parent PLUS loans, managing your own student debt, or helping your child through college, understanding how these financial components work together can help you keep retirement on track while reducing what you owe.

Take Advantage of Employer Benefits Through the SECURE 2.0 Act

One of the most impactful benefits now available to borrowers comes from the SECURE 2.0 Act, which allows employers to match employee student loan payments with contributions to their retirement accounts. If your workplace offers this program, each qualifying loan payment you make can trigger a matching deposit into your 401(k) or a similar plan—even if you aren’t adding money to the account yourself.

This feature is valuable because it allows you to grow retirement savings without pulling resources away from your debt payments. It also lets you tap into the long-term advantages of compounding growth while still focusing on lowering your loan balance. This can be especially beneficial for early‑ and mid‑career earners who want to make progress on their debt without pausing retirement efforts entirely.

To determine whether this option is available to you, reach out to your HR department or your retirement plan provider and ask how to participate.

Be Intentional About Extra Student Loan Payments

Adding extra payments toward your student loans can be an effective strategy—if those payments are applied correctly. Many borrowers don’t realize that loan servicers often place additional payments toward upcoming scheduled payments rather than reducing the principal balance.

While that may look like you’re ahead, it doesn’t shrink the original amount you borrowed. Because interest accumulates based on the principal, failing to target that balance can slow your progress and increase the total interest you pay over time.

To get the most out of any additional payment, you’ll need to formally request—usually in writing—that extra funds be applied directly to your principal. This simple step can shorten your repayment timeline and meaningfully reduce your overall cost. If you’re not sure how your payments are being handled, contact your servicer and ask for documentation to confirm.

Use Pre‑Tax Retirement Contributions to Lower Student Loan Payments

Borrowers enrolled in an income‑driven repayment (IDR) plan can reduce their monthly payments by contributing to a pre‑tax retirement account, such as a traditional 401(k), 403(b), or SIMPLE IRA. Because IDR payments are based on your adjusted gross income (AGI), lowering your AGI through retirement contributions results in a smaller required student loan payment.

This creates a dual benefit: you build retirement savings while reducing your monthly loan expense. For those pursuing Public Service Loan Forgiveness (PSLF) or another long-term forgiveness path, lowering AGI can lead to a greater portion of debt eventually being forgiven. For RIAs, wealth advisors, and HNW individuals confronting layered financial decisions, this strategy can have a notable long-term impact.

Include Long‑Term Loan Forgiveness in Your Financial Strategy

Many borrowers qualify for forgiveness programs that extend over 10 to 25 years. If you fall into this group, it’s worth evaluating whether aggressive repayment is truly the best use of your money. Paying off debt quickly may feel rewarding, but it could reduce the eventual benefit of forgiveness and restrict how much you can save for retirement.

If forgiveness applies to your situation, shifting more dollars into retirement accounts could lower your AGI, decrease monthly payments, and increase the amount forgiven later. Meanwhile, those retirement contributions continue to grow tax‑deferred, helping you protect your long-term financial stability. A comprehensive look at your full financial landscape can reveal the most effective ways to balance loan obligations with retirement planning.

Smart Planning Helps You Advance Both Goals

Managing student loan repayment and saving for retirement doesn’t have to be an either‑or decision. With the right approach, you can keep both priorities moving forward. This might include checking whether your employer participates in SECURE 2.0 matching, confirming that extra payments reduce your principal, increasing pre‑tax retirement contributions if you're on an IDR plan, or evaluating whether forgiveness programs apply to your situation.

Working with a financial advisor can be especially useful if you have multiple goals, variable income, or HNW considerations. A professional can help you run projections, interpret tax impacts, and determine which strategies align best with your long-term objectives.

The Bottom Line: You Don’t Have to Choose

There’s a persistent misconception that you must pick between eliminating student loan debt and preparing for retirement. In reality, strategic planning allows you to do both—especially with resources like the SECURE 2.0 Act, IDR plans, and loan forgiveness programs available to more borrowers.

Financial Aid Awareness Month is a great reminder that financial literacy matters at every stage of life. If you’re navigating student loan repayment while also preparing for the future, now is an ideal time to assess your goals and create a roadmap.

If you'd like support reviewing your financial situation or deciding your next steps, reach out today. With a personalized strategy, you can reduce your loan burden, strengthen your retirement outlook, and feel more confident about where you're headed.