Trick-or-treat: It’s your student loan debt.

Student loan payments resumed in October, and it’s a scary new reality for some borrowers, especially younger adults saving for retirement.

Borrowers enjoyed a three-and-a-half year pause on their federal student loans following the COVID-19 pandemic. But after eight extensions and a law banning additional pauses, tens of millions of Americans are now in repayment.

Studies show that paying off student loan debt can limit how much borrowers save for retirement. However, it’s crucial not to let the weight of student loans overshadow the importance of saving for retirement.

A professional can analyze your current budget and help you pick a student loan repayment plan that aligns with your income and investing goals. Speaking with a financial advisor today can get you personalized advice about how to manage your debt without derailing your retirement plans.

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How student loan repayment impacts your retirement portfolio

It’s understandable to want to eliminate debt from your life as quickly as possible. But neglecting your retirement savings, especially early in your career, can have a major impact on your financial future.

“If you prioritize paying your loans off in full, and you have a big balance, you might not be able to save for retirement for many years,” says Justin Chidester, a certified financial planner and owner of Wealth Mode Financial Planning in Logan, Idaho.

Compound interest is your ally in building wealth, but it requires time to work its magic. By delaying retirement savings, you miss out on the potential exponential growth that comes from investing early.

If your student loan debt is relatively small, it can make sense to prioritize paying it off as quickly as possible, says Chidester.

But if your student loan interest rates are relatively low — such as under 5 or 6 percent — experts say it might make more sense to pay the minimum required amount on your loans and divert extra funds towards retirement savings. That’s because the return on your investments could potentially earn more than the savings from paying off your loans early. Of course, you should consult a financial advisor to determine if that’s the best strategy for you.

Tackling student loan debt while also saving for retirement isn’t impossible. Here are a few other strategies to help you achieve both goals.

Explore ways to lower your monthly payment

Student loan payments resumed in October, so if you’re enrolled in auto-pay, you already know your due date and payment amount.

If your student loan payments take up a significant portion of your income, consider enrolling in an income-driven repayment plan.

You can use the Loan Simulator tool from the U.S. government to figure out the best option for paying back your debt. Shifting to a plan with a lower monthly payment, if you qualify, can free up more money for retirement savings.

A new income-driven repayment plan called SAVE (Saving on a Valuable Education) could significantly lower your monthly payments because payments are based on a smaller portion of your adjusted gross income (AGI).

Single people earning $32,800 a year or less in 2023 could qualify for a $0 monthly payment through SAVE.

“There’s no interest accruing either, so your balance isn’t growing under the SAVE plan, unlike other IDR plans in the past,” says Chidester.

You can apply for income-driven repayment plans at You should also research debt forgiveness opportunities, such as the Public Service Loan Forgiveness program.

It’s worth noting that there’s an “on-ramp transition period” for student loan repayment. Until Sept. 30, 2024, borrowers won’t be penalized for missing payments. But don’t take that as permission to ignore your student debt. Interest will keep accruing, whether or not you’re making payments.

Contribute enough to get your employer’s 401(k) match

Many experts recommend allocating 15 to 20 percent of your salary toward retirement. It’s a nice goal, but a big student loan payment might make it impossible to save that much.

Still, you want to at least contribute enough to your workplace 401(k) or similar retirement plan to get your employer’s full match, if it’s offered. A company match is essentially free money for your future.

“Everyone should be contributing enough to get their company’s 401(k) match — whether they’re paying off student debt or not,” says Chidester.

Many employers offer a full match on the first 3 percent of your contributions. Some offer an additional 50 percent match on the next 2 to 4 percent of contributions.

Set up auto-pay for your student loans

Enabling auto-pay on your federal student loans not only helps you avoid late payments, it can also help lower your interest rate.

By setting up automatic payments, you get a 0.25 percent interest rate reduction. It may not seem like a lot, but every little bit helps pay off your debt faster.

Readjust your budget

Many people put money toward other goals and priorities during the student loan payment pause. Now is a good time to review your budget and find places to cut expenses.

Small adjustments, like cooking at home more or switching to a cheaper phone plan, can free up funds for retirement savings.

You might also consider ways to boost your income, such as getting a higher paying job, asking for a raise or taking on a side hustle.

That extra money can help accelerate both your debt repayment and retirement savings goals.

See if your employer offers any student debt relief options

Under a provision of the SECURE 2.0 Act, legislation signed into law in December 2023, employers can provide 401(k), 403(b) or SIMPLE IRA matching for qualified student loan payments. Employers can choose to opt-in starting January 2024.

“This means borrowers who may only be able to make their loan payment will not miss out on company matching funds,” says Mike Hunsberger, a certified financial planner and owner of Next Mission Financial Planning in Saint Charles, Missouri.

It’s impossible to know how many companies will offer the benefit next year, or how long they’ll take to roll it out. Hunsberger thinks larger companies will likely lead the way because they can better handle extra administrative overhead.

“Borrowers should talk to their employers to find out if they plan to participate — or lobby their employers to participate,” suggests Hunsberger.

Bottom line

Balancing student loan repayment and retirement savings can be challenging, but with careful planning, it’s possible to achieve both goals. Remember, time is your most valuable asset when it comes to investing. By taking proactive steps, like reevaluating your budget and speaking with a financial advisor, you can set yourself up for a comfortable, debt-free retirement.