![Student loan borrowers and advocates rally in front of the US Supreme Court in 2023, calling for the cancellation of student debt. [Getty Images]](https://wimg.heraldcorp.com/news/cms/2026/09/26/news-p.v1.20260917.3cd65e5539cf4d92b95b8bc385d3050d_P1.jpg)
Starting a career in debt versus starting one debt-free can result in a retirement savings gap of nearly twofold, new research shows.
People who enter the workforce carrying student loan debt save up to 45 percent less for retirement than those who graduate without debt, according to a recent report by the Employee Benefit Research Institute, a US public policy research organization. The EBRI examined 401(k) account holders — participants in the most widely used defined-contribution retirement plan in the United States — and found that those with student loans had significantly lower account balances than those without. The gap was widest among participants in their 40s, whose median 401(k) balances were 45 percent lower if they carried student debt.
A 401(k) is a workplace retirement plan in which a set amount is deducted from an employee's paycheck each month and invested, with employers typically adding matching contributions. Workers who begin their careers burdened by student loans naturally find it harder to set aside large sums, leaving them with smaller balances than debt-free peers. The EBRI found that this shortfall compounds over time, with the gap in account balances reaching its peak around the time participants hit their 40s.
Similar findings emerged from other sources. Internal data from Fidelity Investments showed that employees with student loans had lower retirement account balances than those without. Among workers aged 18 to 49, the gap stood at 20 percent. Among those 50 and older — where years of lower contributions have had more time to accumulate — the difference widened to an average of 30 percent.
One mitigating factor has emerged: the Secure 2.0 Act, which took effect in 2024, allows student loan repayments to count toward employer retirement account matching contributions, helping to narrow the gap. Even so, experts say the growing share of workers who begin their careers in debt demands broader solutions, as the disparity at the starting line increasingly determines the quality of life in retirement.
Craig Copeland, EBRI's director of wealth benefits research and the author of the report, told Bloomberg that "the percentage of individuals with student loan debt is much larger than it was 20 years ago, and so is the amount of that debt," adding that "these financial obstacles are reducing workers' savings in meaningful ways, and that appears to persist until retirement."
EBRI data show that 20 percent of 401(k) participants between the ages of 25 and 69 carry student loan debt. Among those aged 25 to 29, the share still burdened by student loans rises to 35.7 percent. According to the Federal Reserve Bank of New York, total student debt stood at $1.65 trillion as of June, a 26 percent increase from the same month in 2016.
kate01@heraldcorp.com
