Yes, student loans impact deferral rates and account balances

A recent study showed that student loan debt has a negative impact on deferral rates and 401(k) account balances. Of course, that’s obvious. Some student loans that students take out, resemble the size of my mortgage that I just paid off. When you have more than $300,000 in debt, deferrals are going to be even harder for those making in the 6 figures.

While SECURE 2.0 allows for matching contributions on student loan payments, I don’t know how many plan sponsors offer it, and it doesn’t change that matching contributions are going to be far less cash than deferrals. Until this country figures out how to deal with the cost of higher education, student loans will still be a drag on 401(k) balances, whether student loan matches or not.

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