Balancing Student Debt and Retirement Goals

Across the United States, two financial challenges continue to weigh heavily on many adults—student loan repayment and long-term retirement planning. With more than 43 million borrowers still carrying student debt, and many repaying those loans well into their 40s, 50s, or later, it’s easy to see why retirement savings sometimes fall to the back burner.

At the same time, surveys consistently show that a significant number of Americans feel they’re not saving enough for retirement. This pressure is even stronger among high‑net‑worth (HNW) earners, mid‑career professionals, and families juggling multiple financial obligations. As February marks Financial Aid Awareness Month, it’s a helpful moment to look at how you can work toward both goals at the same time—and why strategic planning can make a meaningful difference.

Whether you’re repaying your own loans, supporting a child through school, or navigating Parent PLUS obligations, here are practical strategies for building retirement security while managing student loan debt.

Take Advantage of SECURE 2.0 Employer Matching

One of the biggest changes in recent financial legislation is the SECURE 2.0 Act’s provision for employer retirement matches based on student loan payments. This means that if your company offers the benefit, each qualifying student loan payment you make could trigger an employer contribution to your 401(k) or similar retirement plan—even if you aren’t adding money to the account yourself.

This approach allows you to grow your retirement savings without compromising your loan repayment strategy. It also helps you benefit from compounding investment growth much earlier in your career. For professionals in their early and middle career stages who want to stay focused on lowering their loan balance, this benefit can help ensure that retirement planning doesn’t fall years behind.

If you think you may qualify, reach out to your HR department or benefits administrator to see whether this match is available and what steps you need to take to participate.

Apply Extra Loan Payments Correctly

If you’re paying more than the required monthly minimum to reduce your student loan burden faster, that’s a great start—but those payments won’t be as effective unless they’re applied properly. Loan servicers often route additional payments toward future scheduled installments rather than applying them directly to your principal balance.

While having future payments automatically covered may sound helpful, it doesn’t actually shrink your loan balance or reduce the amount of interest that accumulates over time. To ensure your extra payments make a real impact, you’ll need to request in writing that they be applied to the principal only.

This small adjustment can shorten the life of your loan and lower the total interest you’ll pay. If you’re unsure how your payments are being allocated, contact your servicer, ask for clarification, and keep a record of your request for your own files.

Use Retirement Contributions to Lower Income‑Driven Payments

Borrowers enrolled in an income‑driven repayment (IDR) plan have another strategic tool at their disposal: pre‑tax retirement contributions. Payments under IDR programs are tied to your adjusted gross income (AGI), so every dollar you contribute to certain retirement accounts—such as a traditional 401(k), 403(b), or SIMPLE IRA—reduces your AGI and lowers your required monthly loan payment.

This strategy provides two major benefits at once. Not only are you building tax‑deferred retirement savings, but you are also reducing your immediate student loan costs. For those pursuing Public Service Loan Forgiveness (PSLF) or another long‑term forgiveness plan, lowering your AGI may increase the portion of your loan that eventually gets forgiven.

For RIAs, wealth and retirement advisors, HNW households, and individuals trying to coordinate multiple savings goals, this can be a powerful way to align retirement growth and debt management.

Consider the Role of Long‑Term Forgiveness

If you qualify for loan forgiveness after 10 to 25 years of repayment, it’s worth evaluating whether rapidly paying down your loans is the best use of your financial resources. While aggressive repayment might feel rewarding in the moment, it may reduce the long‑term benefit of your forgiveness program—and leave less room to bolster retirement savings.

By contributing more to tax‑advantaged retirement accounts, you may be able to reduce your AGI, decrease your monthly payments, and maximize the amount forgiven at the end of your repayment term. Meanwhile, your retirement contributions continue to grow and compound over time, strengthening your long‑term financial security.

Taking a step back and assessing your full financial outlook can help you determine whether debt reduction or strategic retirement savings will produce the most meaningful long‑term results.

Smart Planning Helps You Move Forward on Both Fronts

Paying off student loans and saving for retirement doesn’t have to be an either–or decision. With the right approach, you can make steady progress on both. Helpful steps may include confirming whether your employer offers SECURE 2.0 student loan matching, verifying how extra loan payments are applied, increasing pre‑tax retirement contributions if you’re using an IDR plan, or reviewing your eligibility for forgiveness programs.

If you have multiple income sources, complex financial needs, or HNW considerations, working with a financial advisor may help you determine which strategies make the most sense for your situation. An advisor can help you evaluate tax implications, compare long‑term outcomes, and understand how different repayment and savings choices affect your overall financial plan.

The Bottom Line: You Can Pursue Both Goals

It’s a common misconception that you must choose between eliminating student loan debt and building retirement savings. With thoughtful planning and the expanded tools now available—such as SECURE 2.0 benefits, IDR programs, and forgiveness options—it’s entirely possible to strengthen both areas at once.

Financial Aid Awareness Month serves as a reminder that financial education matters at every stage of life, not just during school. If you’re balancing student loan repayment while working toward retirement, this is a great opportunity to reassess your goals and build a strategy that supports your future.

If you’d like guidance reviewing your finances or mapping out next steps, consider reaching out for personalized support. The right plan can help minimize your loan burden, maximize your retirement potential, and give you greater peace of mind as you look ahead.