Student Loan Borrowers In Their 40s Have 45% Smaller 401(k) Balances, EBRI Finds

Student loan borrowers in their 40s have median 401(k) balances roughly 45% lower than participants the same age with no student debt, according to a new report from the Employee Benefit Research Institute.

The study matched anonymized TransUnion credit data against 401(k) plan records to compare how borrowers and non-borrowers participate, contribute, and accumulate savings. It lands as more employers weigh the student loan 401(k) match that SECURE 2.0 made possible in 2024.

EBRI also put a price tag on that match. If every employer adopted a student loan matching program, borrowers ages 25 to 69 would collect an estimated $11.2 billion in additional annual employer contributions under a 4% match cap, or $20.2 billion under a 6% cap.

The report, Understanding Who Would Benefit From a Student Loan Retirement Matching Program and by How Much, is the first of two EBRI studies on the topic and was funded by Candidly, a student debt benefits platform. That funding is worth keeping in mind, though the underlying issues the study matches what we’ve seen in our own student loan debt statistics.

Why It Matters

Student loan borrowers who are struggling to repay their student loan debt simply cannot save enough for retirement.

EBRI’s analysis found that employees with student debt kept contributing less over time, and even older participants with student debt still had 401(k) balances about 30% below their debt-free peers. A borrower who contributes 3% instead of 6% in their late 20s isn’t just missing the employer match that year. As the math in our millionaire-by-age breakdown shows, compounding is key, and every dollar lost in your 20s is worth $5-$10 by retirement.

One in five 401(k) participants ages 25 to 69 carried student loan debt in EBRI’s data, which is a large enough share that this is a plan-design problem rather than a personal-finance edge case.

Among participants ages 25 to 29, 35.7% had student loans, compared with 20.8% at ages 40 to 44 and 12.9% at ages 55 to 59. Those older borrowers are the ones we hear from most in questions about handling student loan debt in retirement, because they had the least time to get back on track.

The Details

EBRI’s key findings, by stage of the savings problem:

Participation: Among workers ages 25 to 34 who were eligible for a defined contribution plan, 75.5% of borrowers enrolled, versus 84.1% of non-borrowers. Contribution rates: Borrowers contributed less at every income level. The widest gap was among participants ages 50 to 54, where median contribution rates were 14.7% lower for borrowers. Balances: Median balances were lower for borrowers across all income and tenure levels, with the 45% gap in the 40s the largest. Missed matches: 39.2% of borrowers contributed less than 4% of pay, 49.7% contributed less than 5%, and 61.3% contributed less than 6%. Those are the thresholds where most employer matches top out. What a match is worth: For borrowers contributing below their plan’s match cap, the median employer contribution was 60 to 70 cents for every dollar the employee put in.

That last figure is the one that turns a research finding into a policy argument. Under SECURE 2.0, employers can treat a qualified student loan payment as if it were a 401(k) deferral and match it, so a borrower sending money to their servicer instead of their plan no longer has to forfeit the match.

Our rundown of employer student loan repayment programs covers the other main route employers use to help with student debt.

How This Connects

EBRI cites a $1.66 trillion student loan balance as of the first quarter of 2026, drawn from credit bureau data. The Federal Reserve’s broader consumer credit series puts the figure higher, at $1.86 trillion as of the second quarter of 2026. Either number is more than four times the $360 billion outstanding in 2005, which is the same span over which the borrowers now in their 40s went to school, borrowed loans, and started repayment.

The question of whether to pay off student loans or invest has always come down to the match. Skipping a 401(k) contribution to make an extra loan payment means walking away from an immediate 50% to 100% return on that money, and EBRI’s data shows a majority of borrowers are doing exactly that.

The 401(k) student loan match exists to remove that trade-off, but adoption so far is concentrated among large employers like Boeing, Verizon, and Comcast. Most borrowers still work somewhere that has not offered it (and likely never will).

What’s Next

EBRI’s second study will run the additional match dollars through its Retirement Security Projection Model to estimate how much a student loan match changes retirement income adequacy over a full career.

That is the number plan sponsors will want before adding the feature. In the meantime, borrowers can check whether their employer already offers the match, and if not, contribute at least enough to capture the standard one. Our 401(k) setup walkthrough covers how to find the match threshold in your plan documents.

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