For most people approaching retirement, carrying a student loan across the finish line feels wrong. After decades of building toward a clean slate, the instinct to clear a remaining balance first is completely normal, and there is real comfort in owing nothing to anyone. (See related post: Should you pay your mortgage off before you retire?) But comfort and math are not the same thing. Draining an account to erase a balance, delaying your retirement, or spending down savings too fast are real costs that may outweigh carrying the loan a little longer.
One thing up front: this post is about federal student loans. Private loans work more like any other personal debt, so set those aside for today – we’ll cover those in a future post.
First, try to reframe having student loan debt away from the sense that it’s a liability. That debt very likely paid for the education, yours or your child's, that produced the income you spent a career saving. It is not a mistake hanging over your retirement. It is the financing on an asset that already did its job. Seen that way, the monthly payment is just another ongoing bill, like your phone plan or a utility, part of what keeps your life running. You do not need to extinguish it to retire well. You need a plan for it, and three things make that plan different in 2026 going forward than a year ago.
Is there still a low-payment option if you retire with student loans?
The menu of income-driven plans narrowed sharply earlier this year. The SAVE plan ended by court order in early 2026, and on July 1 the Repayment Assistance Plan, or RAP, launched as the only income-driven plan available for new or newly consolidated loans. RAP bases your payment on a percentage of your income and stretches forgiveness to 30 years. For someone retiring in their sixties, that horizon is effectively no forgiveness at all.
If your loans predate July 2026, you likely still have the older plans, including Income-Based Repayment, the one legacy income-driven option still accepting new enrollees, and a lower income in retirement can mean a genuinely low required payment. The point is not which plan to pick, but that any strategy built around SAVE or an older plan needs a fresh look.
Should you pay off your student loans before you retire?
This is where the debt-free instinct does the most damage. Paying off a loan feels like closing an account, but in retirement it is rarely that simple, because the money usually comes from somewhere with a tax bill attached.
Say you have a $50,000 balance and decide to wipe it out with a withdrawal from your traditional IRA. That is not a $50,000 decision. In the 24% federal bracket, you would need to pull closer to $66,000 to net the $50,000 after taxes, not including any state income taxes. And that extra income does not sit quietly. It can push more of your Social Security into taxable territory and raise your Medicare premiums the following year. A payoff that felt like tidying up can quietly cost more than the loan interest you were trying to avoid.
Federal student loans are also discharged, tax-free, when the borrower dies, and the balance does not pass to your estate or your heirs. If your loan is a Parent PLUS loan you took out for a child, this tilts even further toward patience. The one-time window to consolidate Parent PLUS debt into an income-driven plan closed on June 30, 2026, and RAP excludes these loans entirely, so there is no income-based payment to fall back on. But the same death discharge applies, and a Parent PLUS loan is also forgiven if the student it paid for dies. Spending down your own assets to retire a debt that already has a built-in endpoint deserves real scrutiny.
None of this means never pay it off. If the balance is small, the rate is high, and the cash is idle, closing it out can be exactly right. The point is that it should be a portfolio and tax decision, not a reflex.
Can student loans take money from your Social Security?
Yes, and this is the risk that deserves real attention. Federal loans do not disappear at retirement age. The Department of Education has resumed involuntary collections, and the government can withhold up to 15% of a Social Security check to collect a defaulted federal loan, though it cannot reduce the benefit below $750 a month.
The trap is that default in retirement is often accidental. A botched transition off SAVE, a loan that quietly changed servicers, or a surviving spouse who took over the finances without realizing a loan of their own was still there can all end in default without anyone choosing to stop paying. Roughly 450,000 Social Security recipients are already in default.
The good news is that this is both preventable and fixable. Rehabilitation, meaning nine on-time payments within ten months, removes a default entirely. The real protection, though, is keeping the loan on your radar. A student loan payment belongs in your retirement cash flow the same way an RMD or a Medicare premium does: a known, scheduled item, not a surprise.
You can retire with student loan debt. Whether to carry it or clear it is a math question, not a moral one. What you should not do is let the discomfort of an unpaid balance push back your retirement or drain an account you will need later.
This is exactly what our year-by-year cash flow projections are built to answer. We can show you what carrying the loan actually costs against what paying it off would take from the rest of your plan, so the choice rests on numbers instead of nerves. If you are retiring with a balance on the books, let's talk it through.