What Adults Managing Student Loans Should Understand About Planning for Retirement

Across the United States, many adults find themselves juggling two major financial priorities: paying down student loan debt and preparing for retirement. With more than 43 million borrowers carrying student loans—and many still repaying balances well into their 40s, 50s, and even 60s—it’s easy to see why retirement planning often gets delayed. At the same time, a significant number of Americans, including high‑net‑worth (HNW) earners and mid‑career professionals, feel they’re behind on building long‑term savings.

As we recognize Financial Aid Awareness Month this February, it’s a meaningful moment to revisit how these goals can work together rather than compete. Whether you’re managing Parent PLUS loans, repaying your own education debt, or helping support a child through school, strategic planning can help you grow your retirement nest egg while reducing your student loan balance.

Take Advantage of Employer Benefits Through the SECURE 2.0 Act

One notable opportunity for borrowers today is the student loan payment matching provision created under the SECURE 2.0 Act. This rule allows employers to treat your qualifying student loan payments as if they were retirement contributions—meaning your employer can match them with deposits into your 401(k) or another eligible retirement plan, even when you aren’t contributing to that account directly.

This benefit can be a game-changer. It allows you to stay focused on paying down your student debt without forfeiting the long-term advantages of compound growth in your retirement account. Early- and mid-career professionals, in particular, may find this approach helpful when they feel torn between accelerating debt payoff and building retirement security.

If you’re unsure whether your employer offers this match, reach out to your HR department or retirement plan administrator. Understanding how to enroll—and confirming whether your payments qualify—is an important first step in making the most of this opportunity.

Be Strategic About Extra Loan Payments

Making additional payments toward your student loans can be a smart way to reduce interest and shorten your repayment timeline. But this strategy only works effectively if your loan servicer applies the extra payment correctly.

By default, many servicers apply excess payments to future installments, essentially pushing out your next due date rather than lowering your principal balance. While this may give you temporary breathing room, it doesn’t help reduce the long-term interest you’ll pay. To truly speed up repayment, you must instruct your servicer—in writing—to apply any extra payment directly to the principal.

If you're not sure how your payments are being allocated, contact your servicer and request clarification. Keep documentation of your instructions so you can ensure your repayment strategy is being followed accurately.

Use Retirement Contributions to Lower Income-Driven Repayment Amounts

Borrowers enrolled in an income-driven repayment (IDR) plan may be able to reduce their monthly loan payment by contributing to a pre‑tax retirement account, such as a traditional 401(k), 403(b), or SIMPLE IRA. Because IDR payments are calculated using your adjusted gross income (AGI), contributing pre-tax dollars to retirement lowers your AGI—and therefore lowers your monthly payment.

This approach creates a dual advantage: you're setting aside money for retirement while also reducing your current loan obligation. And if you’re pursuing Public Service Loan Forgiveness (PSLF) or another long-term forgiveness path, decreasing your AGI may ultimately increase the amount forgiven.

For HNW professionals, RIAs, and wealth and retirement advisors managing layered financial responsibilities, this strategy can be especially impactful. It supports both near-term cash flow and long-term wealth building.

Incorporate Long-Term Forgiveness Into Your Overall Plan

For borrowers eligible for forgiveness programs lasting 10 to 25 years, it’s important to evaluate whether aggressively paying down your loans aligns with your broader financial strategy. While rapid repayment may feel gratifying, it may not always be the most efficient use of your money—especially if you qualify for forgiveness under an IDR plan.

If forgiveness is part of your long-term plan, redirecting more money toward retirement savings may serve you better. Increasing retirement contributions can help reduce your AGI, lower your monthly loan payments, and increase the amount eventually forgiven. Meanwhile, your retirement funds continue to grow tax‑deferred, supporting your financial security later in life.

Taking a step back and viewing your financial situation holistically can help you balance these competing goals and choose an approach that maximizes your long-term outcomes.

Practical Strategies to Balance Both Priorities

Managing student loan payments and saving for retirement doesn’t have to be a zero‑sum choice. With thoughtful planning, you can make progress on both. Consider exploring the following steps:

• Check whether your employer offers student loan contribution matching under the SECURE 2.0 Act.
• Confirm that any extra loan payments are applied to your principal, not future payments.
• Increase retirement contributions if you’re on an IDR plan to lower your monthly payment and strengthen long-term savings.
• Review your eligibility for forgiveness programs to ensure you’re optimizing both your payments and retirement contributions.

Working with a financial advisor can be invaluable, especially if you have a high income, multiple financial priorities, or a more complex household financial structure. An expert can help you analyze tax implications, evaluate repayment paths, and coordinate your debt and savings strategies effectively.

The Bottom Line: You Don’t Have to Choose

Many people believe they must prioritize either paying off student loans or saving for retirement, but that simply isn’t the case. Today’s financial tools—from SECURE 2.0 employer matching to IDR plans and forgiveness opportunities—allow borrowers to build wealth while managing their debt.

Financial Aid Awareness Month serves as a reminder that financial education isn’t just for students. If you're navigating student debt while planning for the future, this is an ideal time to reassess your strategy and explore ways to build momentum on both fronts.

If you’d like guidance calculating your options or mapping out a personalized approach, reach out. A tailored financial plan can help you reduce your debt load, strengthen your retirement outlook, and move forward with confidence.