Feb 03 2026 18:17
What Adults Managing Student Loans Should Know About Building a Retirement Strategy
For many adults in the United States, student loan repayment and retirement planning are two major financial priorities that often compete for attention. With more than 43 million borrowers carrying student loan balances—and many continuing to make payments well into middle age—it’s easy to understand why long‑term savings sometimes fall behind.
At the same time, surveys consistently show that a significant portion of Americans feel unprepared for retirement. This is especially true for high‑net‑worth (HNW) earners, mid‑career professionals, and those juggling multiple financial responsibilities. With Financial Aid Awareness Month taking place in February, it’s a timely opportunity to take a closer look at how student loan repayment and retirement goals can work together instead of against each other.
Whether you're paying Parent PLUS loans, working through your own student debt, or helping your child cover education costs, there are practical ways to keep retirement a priority while still managing loan obligations. Here are key strategies to consider.
Take Advantage of SECURE 2.0 Employer Matching
One of the most meaningful updates for borrowers comes from the SECURE 2.0 Act, which lets employers match your student loan payments with contributions to your retirement plan. If your organization offers this feature, every qualifying loan payment you make can trigger a matching deposit into your 401(k) or other eligible retirement account—even if you're not adding money to the account yourself.
This benefit is powerful because it allows your retirement savings to grow without redirecting funds away from loan repayment. You can continue reducing your student debt while still taking advantage of investment growth. For early‑ and mid‑career professionals who don’t want to pause retirement progress, this provides a valuable middle ground.
If you think your employer may offer this benefit, reach out to your HR department or plan administrator. They can explain the eligibility rules and help you sign up if the program is available.
Be Strategic When Making Extra Payments
Many borrowers choose to pay additional amounts toward their student loans to shorten the repayment timeline. This can be an excellent strategy—if the extra money goes where you intend.
Loan servicers sometimes apply extra payments to future installments rather than reducing the loan principal. While this might temporarily lower your next bill, it doesn’t decrease the amount of interest that accumulates over time.
To get the most out of your extra payments, request in writing that they be applied directly to your principal balance. This small but important step can accelerate your payoff schedule and reduce total interest costs.
If you’re unsure how your payments are currently being applied, contact your servicer for clarification and keep documentation of any instructions you provide.
Lower Loan Payments Through Pre‑Tax Retirement Contributions
For borrowers enrolled in an income‑driven repayment (IDR) plan, contributing to a pre‑tax retirement account such as a 401(k), 403(b), or SIMPLE IRA can have an added payoff. Because IDR plans calculate monthly payments based on your adjusted gross income (AGI), contributing to these accounts lowers your AGI—and in turn reduces your required monthly payment.
This approach provides two valuable outcomes at once. You build retirement savings on a tax‑deferred basis while also easing your student loan payments in the present. And for those working toward Public Service Loan Forgiveness (PSLF) or other long‑term forgiveness options, lowering your AGI may increase the total amount ultimately forgiven.
For RIAs, wealth managers, retirement advisors, and HNW professionals trying to coordinate multiple goals, this strategy can offer meaningful financial efficiency.
Consider Long‑Term Forgiveness in Your Overall Strategy
Borrowers eligible for long‑term forgiveness programs—typically ranging from 10 to 25 years—should think carefully before committing to an aggressive repayment approach. While paying off debt quickly can feel productive, it may not be the optimal move if forgiveness is available to you.
Reducing your AGI through retirement contributions could lower your monthly payments and increase the amount forgiven in the long run. At the same time, those retirement contributions continue to grow tax‑deferred, helping you preserve future financial stability.
Taking a holistic look at your budget, income, taxes, and long‑term goals can help clarify whether aggressive repayment or strategic contributions will serve you better.
Practical Planning Helps You Move Forward on Both Goals
Balancing student loan payments with retirement saving doesn’t have to be overwhelming. In fact, many borrowers can make progress on both by identifying the right mix of strategies based on their income, repayment plan, and financial priorities.
Steps you might consider include:
- Checking whether your employer offers student loan–based 401(k) matching under SECURE 2.0.
- Ensuring extra payments are applied to your principal rather than future installments.
- Increasing pre‑tax retirement contributions if you’re enrolled in an IDR plan.
- Reviewing eligibility for forgiveness programs and how they fit into your long‑term goals.
For those with multiple priorities or more complex financial considerations, partnering with a financial advisor can provide clarity. An advisor can help you run projections, understand tax implications, and build a strategy tailored to your circumstances.
The Bottom Line: You Don’t Have to Choose One or the Other
It’s a common misconception that you must pick between paying down student loans and saving for retirement. The reality is that, with thoughtful planning, you can successfully do both—especially with tools like SECURE 2.0, IDR plans, and forgiveness programs now more accessible.
Financial Aid Awareness Month serves as a reminder that financial education is valuable throughout adulthood. If you’re trying to balance student loan repayment while preparing for retirement, now is a great moment to reassess your strategy and take actionable next steps.
If you’d like support reviewing your options or mapping out a personalized plan, reach out today. With the right approach, you can reduce your student loan burden, strengthen your retirement outlook, and move forward with greater confidence.