Client outcomes

Student debt and retirement: 6 tips to help guide clients toward financial stability

November 17, 2023
A group of professionals in a meeting.

Key Takeaways:

  • Americans are struggling with student loan payments, but it’s not just the younger generations.
  • 1 in 10 employees ages 45+ have student loan debt, and more than half agree that student loan payments have impacted their financial stability.
  • You can help clients manage their student loan debt with careful planning and ongoing guidance.


Retirement concerns

It’s no secret that many Americans are struggling with student loan debt. And while you could assume it’s only younger people who are concerned, older generations are also feeling burdened with the resumption of payments. A new survey by the Nationwide Retirement Institute® finds that even seasoned employees are experiencing significant financial pressures due to the resumption of student loan payments on October 1st. Over 1 in 10 (12%) employees ages 45+ currently have student loan debt and most of these individuals (61%) agree the reinstatement of student loan payments has negatively impacted their financial stability and long-term planning. Another two-thirds (66%) agree repayments will significantly affect their ability to save for retirement.1

Knowing this, concerns about student loan debt could be an issue that your older clients will need addressed when discussing retirement planning. According to U.S. Census data2 there are 140 million Americans ages 45 or older. With 12% of this group having student loans according to this survey,3 there’s a potential for nearly 17 million older Americans making financial decisions as a result of student loan payment resumption.

Below, we’ll share 6 tips on how to approach financial planning with clients who have student loan debt:

  1. Understand your client’s unique situation: Start by gathering comprehensive information about your client’s student loans. You’ll want to note the outstanding balance, interest rates, loan servicer and repayment terms, along with their current strategy for repayment. Digging into the specifics of your client’s student debt can give you the perspective you need to help them effectively plan for retirement.
  2. Incorporate student loan payments into financial planning: A client’s financial plan needs to consider the impact of student loan repayments. You can aid your clients in prioritizing their financial objectives and allocating resources accordingly. Depending on their specific situation, they may want to adjust retirement plan contributions, explore alternative income sources, or find ways to reduce expenses to more quickly pay down debt.
  3. Evaluate retirement goals: Review your clients’ retirement objectives. When exploring how student loan repayments may affect their capacity to achieve these goals, consider important factors such as age, income, and other financial commitments. For some, paying down debt as quickly as possible and cutting spending in other areas will be the best strategy; for others, it may make sense to pay off loans over time to prioritize other “worse” debt or emergent expenses.
  4. Explore available options: Clients may not be aware of the many options available to manage their student loan debt whilst simultaneously saving for retirement. Income-based repayment plans, loan consolidation, refinancing or federal programs should be discussed with your client based on what they may qualify for.
  5. Advocate for employer-sponsored solutions: Looking at the bigger picture, employers can be an integral part of the solution for Americans dealing with student loan debt. If possible, you can encourage your clients to champion their employers to offer assistance for student loan payments, like making matching contributions to retirement plans based on the student loan repayments or offering retirement plan packages that generate guaranteed income streams. Your clients may also want to consider working for a company with such benefits if they’re looking for a new job.
  6. Provide ongoing guidance and support: Regular reviews of your clients’ financial situations and helping them build financial security will go a long way in helping them achieve their goals, regardless of student loan debt. As a financial professional, it’s also helpful to stay informed on student loan updates regarding federal loan programs like student loan forgiveness.

It’s important to remember that loan debt is a widespread issue that impacts Americans of all ages, including those nearing retirement. As a financial professional, understanding your client’s unique situation and incorporating their student loan repayments into financial planning is crucial. By regularly reviewing your clients’ financial situations and providing ongoing guidance, you can help them navigate this financial burden while still progressing towards their retirement goals. Student loan debt is a hurdle to financial planning, but it’s possible to manage this debt while still helping secure a comfortable future for your clients.