How to manage student loans without losing sight of retirement

Student loans have been in the headlines a lot lately — from changing repayment plan options to court decisions about forgiveness. It can be hard to know what applies to you or how to move forward if you have loans.

This article walks through practical steps to get a clear picture of your student loans, explore repayment options and look for ways to make room for retirement saving, even if it’s a small amount at first.

• Student loan balances are significant. Student loan borrowers today carry an average federal balance of about $39,000, and parents who helped fund their children’s educations owe about $110 billion in Parent PLUS and other student loans.^{1, 2}
• Getting organized and staying current are powerful first steps. Knowing what you owe, to whom and at what interest rates — as well as checking current repayment information — can help you make more confident decisions.
• You may be able to work on both goals. Even small, steady retirement contributions while you repay loans can add up over time.

Put your loans in one list. Use an app, spreadsheet or notebook to list each loan’s servicer, balance, interest rate and monthly payment and remaining term.

Check how loans fit into your budget. Add your total monthly loan payments to your essential expenses and calculate what’s left for savings.

Choose one small next step from the tips below. That might be finding $10 to $25 per paycheck for savings or visiting the StudentAid.gov Manage Loans page to review repayment options.

The tips below build on your starting list. They walk through how to understand your loans in more detail, explore repayment options and fit payments and saving into your budget.

Build a complete picture of your loans

Understanding how your loans work can help you decide what to do next.

• Use official sources to confirm information for the list you started above. For federal loans, log in to StudentAid.gov. For private loans, log in to each loan servicer’s site or app. If you’re not sure what loans you have or who services them, you can request free credit reports at AnnualCreditReport.com to check what’s listed.
• Review your loans regularly. Revisit your list at least once a year and when your income or repayment plans change.
• Stay current on updates. Federal student loan programs and rules can change. Checking federal student loan repayment plans from time to time can help you stay informed about the latest updates, including those signed into law as part of the One Big Beautiful Bill Act (OBBBA).

Once you know what you owe, explore repayment options to find out if any fit your situation.

• Check your federal repayment choices. Federal programs can:
  • Combine multiple federal loans into one new loan through consolidation
  • Base your payment on income and family size through income-driven repayment (IDR) plans
  • Offer standard, graduated or extended plans with different payment levels and terms
• If you have private loans, ask about alternatives. Some lenders offer different payment schedules or longer terms. Refinancing may change your rate or term, so compare offers carefully.
• Weigh pros and cons before making moves. Lower monthly payments now may mean paying more interest over time. Shorter terms usually mean higher monthly payments but less total interest. Moving federal loans into a private loan can mean losing federal protections and benefits, so consider that carefully.
• Because repayment programs and eligibility can change, check StudentAid.gov Manage Loans for federal repayment information or speak with your loan servicer to review current options.

Building your loan payments into a realistic budget can help you avoid surprises.

• Create or update your monthly budget (you can use our budgeting article to get started). Begin with your take-home income. List essential expenses and student loan payments, then see what remains for other goals, including retirement and emergency savings.
• See what can go toward savings now. After you’ve covered essentials and loan payments, look for a small amount you can set aside for savings — even $10 to $25 per paycheck for emergency or retirement saving is a meaningful start.
• Use auto-pay to stay on track. Scheduling recurring payments from your checking account can help you avoid missed due dates. Many federal and private loans offer a small interest-rate discount for using auto-pay.
• Adjust as your situation changes. If your income goes up or down, or your expenses change, revisit your budget and repayment plan.
• Consider extra payments carefully. Paying more than the minimum can reduce your principal faster and may lower total interest costs, but it may not be a priority if you’re working toward forgiveness or still building emergency or retirement savings.

Student loans often feel like they take up all the space in your budget. Making even a little room for retirement saving can help your future self.

• Let time and compounding work for you. Earnings on your retirement investments can be reinvested and can grow over time. Starting with a small amount now can sometimes have more impact than waiting to save larger amounts later. Log into your account and use My Retirement Goals to find out how small contributions can add up down the road.
• Start with an amount that feels manageable. If your budget is tight, you might begin with a low percentage or dollar amount and increase it gradually.
• Use milestones to step up savings. When you get a raise, bonus or finish paying off a smaller loan, you might direct part of your increase or savings to your retirement contributions. If your plan offers automatic increases, take advantage of them. Or, set reminders to step up contributions a little each year.
• Take advantage of employer retirement matches, if available. Some employers match contributions to your retirement plan up to a certain amount. If yours does, consider contributing enough to receive the full match if you can.
• Know how pre-tax retirement contributions may impact repayment. Making pre-tax contributions can reduce your taxable income, which some income-based repayment plans use to calculate payments. Your loan servicer or a tax professional can explain how this applies to you.