EBRI puts a $10 billion price on student loan debt

The student loan payment sitting in a participant's monthly budget is quietly resizing the 401(k), and InvestmentNews' account of new research from the Employee Benefit Research Institute puts the annual cost, measured in employer matches that never get made, at $10 billion — money that stays in the corporate treasury and never reaches a retirement account.

The study, "Understanding Who Would Benefit From a Student Loan Retirement Matching Program and by How Much," opens a two-part EBRI series on where student debt and retirement preparedness meet. Its author, Craig Copeland, directs wealth benefits research at the Washington, D.C., institute, and the numbers he works from describe a gap that opens at the plan's front door and then refuses to close.

That gap runs widest in midcareer. Among 401(k) participants in their 40s — the cohort EBRI flags as most severely affected — median account balances for those carrying student loan debt came in roughly 45 percent below the median for those without it. Following the same participants across 2019 through 2023, EBRI found the shortfall persisted into their 50s and 60s, with balances still about 30 percent under debt-free peers — compounding does not quietly repair the deficit but carries it forward for the length of a working life.

Start at enrollment and the gap is already visible: among workers ages 25 to 34 eligible for a defined contribution plan, 75.5 percent of those with student loans enrolled, against 84.1 percent of those without — an 8.6 percentage point participation deficit that opens before a single deferral decision gets made. And the exposure is not confined to the youngest cohort: about one in five active 401(k) participants ages 25 to 69 carried student debt across the 2019–2023 window, with 35.7 percent of participants ages 25 to 29 holding it, 20.8 percent of those 40 to 44, and still 12.9 percent at ages 55 to 59 — roughly one participant in eight inside the final decade before retirement income begins.

Set against the aggregate, the pattern loses some of its surprise: U.S. student loan debt reached $1.66 trillion by the end of the first quarter of 2026, according to the Federal Reserve Bank of New York, up from $360 billion in 2005. The EBRI analysis draws on the EBRI/ICI 401(k) Plan Database linked with anonymized TransUnion credit data, a pairing that lets the institute read plan accounts and credit files for the same people rather than infer one from the other — which is why these findings should carry more weight with sponsors than the anecdotal version of this argument that has circulated in benefits meetings for a decade.

Copeland reads the results as showing the loan balance itself explains only part of the effect; what concerns him is how the payment reshapes participation, contribution rates and eventual accumulation, and how those differences compound across an entire career.

The federal instrument for the problem is already law: InvestmentNews notes that a provision embedded in statute — SECURE 2.0's student-loan match, which lets an employer treat a participant's qualified student loan payment as though it were a retirement deferral for matching purposes — may be one of the most significant tools plan sponsors have yet to fully deploy.

The design logic is clean: the worker pays down the loan, the employer credits the match, the worker stays attached to the plan. Whether the benefit turns out real or nominal likely rests on mechanics — payroll feeds, loan-payment verification, and recordkeeping platforms built to match deferrals rather than outside payments. Sponsors who build the student-loan match into onboarding as an automatic feature will likely recover participation far more cheaply than those who roll it out as a manual election, and that is a bet on plumbing, not generosity. It is also a bet a plan can measure inside a single plan year, which is more than can be said for most of the design debates sponsors spend their committee time on.

As this publication has argued, debt repayment has become the plan's central problem, and EBRI's numbers push that claim in a specific direction. A sponsor that routes the loan payment through the savings decision is not bolting on a benefit but defending a relationship, because a participant whose repayment runs through the plan has a standing reason to keep the paycheck routed there too; the recordkeepers and plan advisories building debt tools into their platforms are chasing that same arithmetic, and the ones that own the repayment feed will be the ones holding the account when the loan balance hits zero.

The pattern of provisions that sit unused has shown up on these pages before: EBRI's own HSA research found average balances at a record while only 18 percent of accountholders invested beyond cash, leaving the account's longest-horizon advantage largely unclaimed. A student-loan match that lives in the plan document and never reaches the participant belongs to the same family of failures, and the fix in both cases runs through defaults rather than education.

The $10 billion will not shrink on its own. The variable to watch is adoption among large sponsors over the next few plan years, and whether the first wave of them — the ones that wire the match into enrollment instead of a form — turns the student loan from a reason participants opt out into a reason they stay in.