For many adults in the United States, student loan repayment and retirement planning often compete for the same financial attention. With more than 43 million borrowers still carrying student debt well into midlife and beyond, it’s easy to understand why saving for the future can slip down the priority list.
At the same time, numerous Americans—especially high‑net‑worth individuals and mid‑career professionals—feel unprepared for retirement. As February marks Financial Aid Awareness Month, it’s an ideal moment to revisit how these two goals can work together rather than against each other. Whether you’re repaying Parent PLUS loans, your own student debt, or supporting a child through college, you can still build meaningful retirement savings.
Tap Into Employer Benefits Provided by the SECURE 2.0 Act
One of the most impactful changes for borrowers in recent years is the student loan payment match introduced through the SECURE 2.0 Act. If your employer participates, every eligible student loan payment you make can trigger a matching contribution to your workplace retirement plan—even if you are not personally contributing to the account.
This structure allows you to focus on repaying your loans while still accumulating retirement savings. Because those matched dollars can grow through compounding over time, this benefit is especially valuable for professionals who want to reduce their debt without delaying long-term financial planning.
To determine whether you qualify, reach out to your HR team or retirement plan administrator. They can walk you through the enrollment process and explain how your company applies the match.
Be Intentional When Making Extra Loan Payments
If you’re able to put extra money toward your student loans, it can help shorten the repayment timeline—provided the payments are allocated correctly. Many loan servicers automatically move additional funds toward future payments instead of lowering your principal balance.
While that approach may seem helpful, it doesn’t decrease the amount of interest that accrues over time. To make real progress, you’ll need to request that extra payments be directed specifically toward the principal.
A brief written instruction to your loan servicer can make a significant difference in how quickly your balance falls. If you’re unsure how your payments are currently applied, give your servicer a call. Keep copies of any written requests for your records.
Lower Student Loan Payments by Increasing Retirement Contributions
Borrowers using an income-driven repayment (IDR) plan can benefit from contributing to a pre-tax retirement account such as a traditional 401(k), 403(b), or SIMPLE IRA. Because IDR calculations are based on your adjusted gross income (AGI), reducing your AGI through retirement contributions can lead to lower monthly student loan payments.
This approach creates a dual win. You’re building tax-advantaged retirement savings while also decreasing your immediate loan obligations. For borrowers pursuing Public Service Loan Forgiveness (PSLF) or other long-term forgiveness options, a lower AGI can increase the total amount forgiven over time.
This strategy can be especially effective for RIAs, wealth and retirement advisors, and high‑net‑worth clients managing multiple financial priorities. Adjusting your contributions can reshape both your near-term cash flow and your long-term financial picture.
Incorporate Long-Term Forgiveness Into Your Broader Plan
For borrowers eligible for forgiveness programs that span 10 to 25 years, it’s worth considering whether aggressive repayment is truly the best use of your resources. While paying down your balance quickly can feel rewarding, it may reduce the benefits of forgiveness and leave fewer funds available for retirement savings.
By contributing more to your retirement accounts, you may be able to reduce your AGI, decrease your monthly payments, and ultimately increase the amount forgiven under your repayment plan. Meanwhile, your retirement funds continue to grow tax-deferred.
Taking the time to assess your entire financial landscape—your income, goals, tax situation, and forgiveness eligibility—can help you strike a balance between paying off debt and preparing for retirement.
Smart Planning Helps You Move Forward on Both Goals
Managing student loans doesn’t mean you have to put your retirement on hold. With the right strategies, it’s possible to make steady progress on both. That may involve checking whether your employer offers SECURE 2.0 Act matching, ensuring extra payments go toward your principal, increasing pre-tax retirement contributions if you’re on an IDR plan, or confirming whether a forgiveness program fits into your long-term outlook.
If your financial situation includes multiple income streams, business ownership, or high-net-worth considerations, partnering with a financial advisor can add clarity. An advisor can help you understand the tax impact of each decision and evaluate how various strategies fit together.
The Bottom Line: You Don’t Have to Choose
There’s a common misconception that borrowers must prioritize either student loan repayment or retirement savings—but with careful planning, both are achievable. Tools like the SECURE 2.0 Act, income-driven repayment, and forgiveness programs offer more flexibility than ever.
Financial Aid Awareness Month is a timely reminder that improving your financial knowledge is valuable at every stage of life. If you’re juggling student loan debt while working toward retirement, this month offers a chance to pause, reassess your plan, and move forward with confidence.
If you want help reviewing your options or creating a customized plan, reach out today. A thoughtful strategy can help lighten your debt load, strengthen your retirement outlook, and give you greater peace of mind about the road ahead.
