For many adults in the United States, student loan repayment and retirement planning often compete for the same financial bandwidth. With more than 43 million people carrying student loan balances—and many still making payments well into their 40s, 50s, and beyond—it’s easy to understand why saving for the future can feel out of reach.
At the same time, research shows that a significant share of Americans feel they’re behind on their retirement goals. This is especially true for high‑net‑worth (HNW) individuals, mid‑career professionals, and families juggling multiple priorities at once. As we recognize Financial Aid Awareness Month this February, it’s an ideal moment to step back and think about how strategic planning can help you move forward on both fronts.
Whether you’re repaying Parent PLUS loans, tackling your own student debt, or supporting your child’s education, here are key considerations to help you manage today’s payments while building tomorrow’s security.
Take Advantage of Employer Benefits Through the SECURE 2.0 Act
One of the most impactful developments for borrowers is the employer match on student loan payments introduced under the SECURE 2.0 Act. Under this provision, companies can treat your qualifying student loan payments the same way they treat contributions to your retirement plan. That means your employer may add matching funds to your 401(k) or other retirement account even if you aren’t currently contributing to the account yourself.
This benefit is a game changer for borrowers who want to make progress on retirement but feel constrained by student loan obligations. It lets you continue focusing on debt repayment while still benefiting from consistent retirement contributions and the compounding growth that comes with them. For early‑ and mid‑career professionals, this support can make it much easier to stay on track financially.
If you’re unsure whether your organization participates, reach out to your Human Resources department or plan administrator to learn what’s available and how to enroll.
Be Strategic When Making Extra Loan Payments
If paying down your student loans faster is one of your goals, adding extra payments can be a smart tactic—but only if those payments are applied correctly. Many servicers automatically put extra funds toward future payments instead of the principal balance you actually owe.
Although this might make you appear ahead on your schedule, it doesn’t help reduce long‑term interest costs. To ensure your extra payment truly reduces your balance, submit a written request asking that additional funds be applied specifically to the principal. This simple adjustment can shorten your repayment timeline and significantly cut down on interest.
If you’re not sure how your payments are being allocated, contact your servicer for confirmation—and keep documentation of your request for your records.
Use Retirement Contributions to Lower Student Loan Payments
Borro wers enrolled in income‑driven repayment (IDR) plans may benefit from increasing contributions to pre‑tax retirement accounts 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 can reduce your required monthly payment.
This approach creates a valuable two‑fold benefit: you grow your tax‑deferred retirement savings while also reducing the amount you owe each month. For borrowers pursuing Public Service Loan Forgiveness (PSLF) or other long‑term forgiveness pathways, lowering your AGI may also result in a greater portion of your balance being forgiven down the line.
For RIAs, wealth advisors, and HNW households navigating layered financial priorities, this strategy can play an important role in long‑term planning.
Consider Long‑Term Forgiveness in Your Strategy
Borrowers eligible for forgiveness programs spanning 10 to 25 years should evaluate whether aggressive repayment is truly the best use of resources. Although paying down debt quickly can feel productive, it may reduce the benefits of forgiveness programs and limit your ability to build retirement savings.
If you qualify for forgiveness, shifting some focus toward retirement contributions may lower your AGI, reduce monthly payments, and increase the total forgiven amount. Meanwhile, your retirement savings continue to grow tax‑deferred, supporting your long‑term goals. Reviewing your complete financial picture can help determine whether a balanced or forgiveness‑focused approach is right for you.
Thoughtful Planning Helps You Move Forward on Both Goals
You don’t have to choose between paying down student loans and saving for retirement. With the right approach, you can make meaningful progress in both areas. Your plan might include confirming whether your employer offers a student loan 401(k) match, ensuring extra payments are applied to your principal, maximizing pre‑tax retirement contributions if you’re on an IDR plan, or determining whether you qualify for forgiveness programs.
For those managing complex finances or juggling multiple priorities, a financial advisor can help you analyze the numbers, understand tax implications, and create a strategy that aligns with your long‑term goals.
The Bottom Line: You Can Balance Today’s Payments With Tomorrow’s Goals
It’s a common misconception that you must prioritize either loan repayment or retirement savings—but in reality, you can do both with the help of intentional planning. With tools like employer matching under the SECURE 2.0 Act, income‑driven repayment options, and forgiveness programs, borrowers now have more flexibility than ever.
Financial Aid Awareness Month is a great reminder that financial learning doesn’t end after school. If you're working to reduce your student loan debt while planning for a comfortable retirement, now is an excellent time to revisit your strategy and adjust where needed.
If you’d like support reviewing your situation or mapping out your next steps, reach out anytime. A tailored plan can help you reduce debt, strengthen your retirement outlook, and move forward with confidence.
