Navigating Student Loans While Building Your Retirement Plan

Student loan debt and retirement planning are two major financial pressures facing adults across the United States. With millions of borrowers carrying student debt well into midlife and beyond, it’s easy to see why long-term savings often slip down the priority list. At the same time, many Americans—especially high‑net‑worth professionals and those in the middle of their careers—feel they aren’t saving enough for retirement. With February recognized as Financial Aid Awareness Month, it’s an ideal moment to take a closer look at how these goals can align rather than compete.

Whether you’re repaying your own education debt, supporting a child’s college costs, or dealing with Parent PLUS loans, you don’t have to choose between eliminating debt and preparing for retirement. With the right strategies, you can move forward on both goals at the same time.

Take Advantage of the SECURE 2.0 Act Employer Match

One of the most impactful recent changes for borrowers comes from the SECURE 2.0 Act, which allows employers to match your student loan payments with contributions to your retirement plan. If your company offers this benefit, every qualifying loan payment you make can trigger a deposit into your 401(k) or similar account—even if you’re not contributing personally at that moment.

This is a significant opportunity for anyone balancing loan repayment with long‑term savings. Instead of choosing between reducing debt or saving for retirement, this match allows you to do both by building your investment balance while staying focused on loan repayment. For early‑ and mid‑career professionals in particular, the ability to grow retirement savings sooner can meaningfully boost long‑term compounding.

If this benefit might apply to you, reach out to your HR team or plan administrator to ask whether it’s available and how to get started.

Be Intentional When Making Extra Payments

Many borrowers try to pay off their loans faster by adding extra money to their monthly payments. While this approach can be effective, it only works as intended if your servicer applies those additional funds correctly.

Loan servicers often apply extra money toward future scheduled payments instead of directly reducing the principal balance. While this may give the impression that you’re ahead, it doesn’t help decrease the total interest you’ll pay over time. To maximize your repayment efforts, you must request—ideally in writing—that your servicer apply any extra payments directly to your principal.

This simple step can shorten your repayment timeline and reduce your long‑term interest costs. If you’re not sure how your payments are being allocated, call your servicer and ask for clarification. Be sure to document your request for future reference.

Lower Your AGI to Reduce Income‑Driven Payments

If you're enrolled in an income‑driven repayment (IDR) plan, contributing to a pre‑tax retirement account can help lower your monthly student loan payments. Accounts such as traditional 401(k)s, 403(b)s, and SIMPLE IRAs reduce your adjusted gross income (AGI), and because IDR payments are calculated based on AGI, lowering it means your required payments decrease as well.

This strategy creates a two‑fold advantage. You’re saving for retirement in a tax‑advantaged account while simultaneously reducing your current loan payment burden. For individuals pursuing Public Service Loan Forgiveness (PSLF) or other long‑term forgiveness pathways, this can further increase the eventual amount forgiven by keeping required payments lower.

For wealth and retirement advisors, registered investment agents (RIAs), and HNW individuals, this coordinated approach can be especially effective when managing multiple financial priorities.

Consider Forgiveness Before Accelerating Payments

Borrowers pursuing forgiveness programs with timelines ranging from 10 to 25 years need to assess whether aggressive repayment is really the best strategy. While paying extra can feel productive, it may reduce the benefit of eventual forgiveness and limit how much you’re able to contribute to retirement accounts.

If you qualify for forgiveness, directing more money toward retirement savings may produce a stronger long‑term outcome. Contributing more pre‑tax dollars reduces your AGI, which lowers your monthly payments and may increase the final forgiven amount. Meanwhile, your retirement contributions continue compounding, supporting your long‑term financial stability.

Taking time to evaluate your full financial picture—debt, savings, income, and goals—can reveal a more efficient way to balance repayment and future planning.

Smart Planning Helps You Move Forward on Both Goals

Balancing student loans and retirement savings isn’t about choosing one over the other. The key is using strategies that fit your income, tax situation, and priorities. This might involve confirming whether your employer offers loan‑based retirement matches, checking that your extra payments are applied correctly, increasing pre‑tax contributions while on an IDR plan, or reviewing forgiveness options that may be available to you.

For those with complex financial circumstances, multiple income sources, or high‑net‑worth considerations, working with a financial advisor can provide clarity. Having a professional help you analyze your cash flow, taxes, and long‑term projections can make it easier to identify the most effective path forward.

Bottom Line: You Don’t Have to Choose

The belief that you must prioritize either student loan repayment or retirement savings is outdated. With today’s tools—including SECURE 2.0 provisions, income‑driven repayment options, and multiple forgiveness pathways—you can make progress on both simultaneously.

Financial Aid Awareness Month offers a reminder that financial knowledge matters at every stage of adulthood. If you’re juggling student loan repayment while planning for long‑term security, now is a great time to reassess your goals, explore your options, and take thoughtful action.

If you’d like support analyzing your situation or creating a tailored plan, don’t hesitate to reach out. A personalized strategy can help you reduce your debt stress, strengthen your retirement outlook, and step confidently into the future.