For many adults in the United States, balancing student loan repayment with retirement planning is a major financial challenge. Millions of borrowers carry student loan balances well into midlife and beyond, making it difficult to prioritize long-term savings. At the same time, many people—especially high-net-worth (HNW) earners and those in the middle of their careers—feel they’re falling behind on retirement preparation.

Since February is Financial Aid Awareness Month, it’s an ideal moment to step back and consider how these two goals can work together. Whether you’re juggling Parent PLUS loans, managing your own student debt, or helping your children with education costs, understanding how to coordinate retirement planning and loan repayment can make a measurable difference.

Take Advantage of Employer Matching Through the SECURE 2.0 Act

One of the most meaningful policy changes in recent years is the student loan payment matching provision created by the SECURE 2.0 Act. Under this rule, employers can match your qualifying student loan payments by contributing to your workplace retirement plan—such as a 401(k)—even if you're not adding money to the account yourself.

This benefit gives borrowers a way to grow their retirement accounts while still prioritizing student loan repayment. Because those matching contributions begin compounding right away, you’re able to strengthen your long-term savings without diverting funds away from your loan strategy. For early- and mid-career professionals, this can be an especially helpful way to avoid delaying retirement progress.

If you’re unsure whether your workplace offers this feature, reach out to Human Resources or your plan provider and ask how to participate.

Be Smart About Applying Extra Loan Payments

Putting additional money toward your student loans can be a great way to reduce interest and shorten your repayment timeline, but only if those payments are applied correctly. Many borrowers don’t realize that servicers often allocate extra payments toward future installments instead of reducing the principal balance.

While being "ahead" on payments may sound appealing, it doesn’t help lower the total interest you accrue over time. To get the maximum impact from your extra payments, you must tell your servicer—preferably in writing—that you want all additional amounts directed to your principal.

If you aren’t sure how your payments are being applied, contact your servicer for clarification and keep notes or documentation of your request. This simple step can significantly reduce your total repayment cost.

Use Pre-Tax Retirement Contributions to Lower Income-Driven Payments

Borrowers in income-driven repayment (IDR) plans may find that contributing to pre-tax retirement accounts offers a strategic advantage. Accounts such as traditional 401(k)s, 403(b)s, or SIMPLE IRAs reduce your adjusted gross income (AGI), and IDR payment calculations are based on that number.

Lowering your AGI through retirement contributions can result in smaller monthly loan payments. At the same time, you're building tax-deferred savings that support your future financial security. This approach can be especially beneficial for those pursuing Public Service Loan Forgiveness (PSLF) or other long-term forgiveness programs, as lower payments can increase the amount ultimately forgiven.

For HNW individuals balancing complex financial priorities, this strategy can help synchronize debt management with long-term investment planning.

Consider How Forgiveness Programs Fit Into Your Long-Term Plan

Borrowers with access to loan forgiveness—typically over 10 to 25 years—should think carefully about whether aggressive repayment is the best use of their income. Paying down debt quickly may feel productive, but doing so can reduce the amount eligible for forgiveness and potentially limit how much you can invest for retirement.

If forgiveness is a realistic option for you, increasing retirement contributions may help lower your AGI and reduce your IDR payments, resulting in more forgiven at the end of the term. Meanwhile, your retirement investments continue compounding tax-deferred, helping you stay on track for the future.

Taking a comprehensive look at your financial situation can help you determine whether it makes more sense to prioritize retirement savings, loan repayment, or a balanced combination of the two.

Practical Planning Can Support Both Goals

Managing student debt doesn’t mean you have to sideline your retirement progress. With the right approach, you can make steady headway in both areas. Some effective steps include confirming whether your employer offers student loan-related 401(k) matching, ensuring that extra loan payments are directed toward your principal, increasing pre-tax retirement contributions if you're in an IDR plan, and exploring whether you qualify for forgiveness programs.

For individuals with layered financial goals or more complex income situations—such as HNW families or professionals with multiple revenue streams—working with a financial advisor can help you evaluate the tax consequences and potential benefits of each strategy.

You Don’t Have to Choose Between the Two

Many borrowers assume they must pick between paying off student loans and saving for retirement, but that’s no longer the case. Thanks to tools like the SECURE 2.0 Act, income-driven repayment options, and forgiveness pathways, it’s more possible than ever to tackle both goals at once.

Financial Aid Awareness Month serves as a reminder that financial education matters at every stage of life—not just during college. If you’re navigating the realities of student debt while trying to prepare for retirement, now is a great time to reassess your plan and explore new opportunities for balance.

If you’re ready for guidance or want help reviewing your options, reach out to our office today. A personalized strategy can help you reduce your debt load, strengthen your retirement outlook, and feel more confident about the path ahead.

Disclaimer:

The information presented here is for educational purposes only and is not a solicitation for the purchase of any financial product. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting financial professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.