The Center of Retirement Research at Boston College has found that participation rates don’t vary for those participants who have or don’t have student loan debt. So what! Given auto-enrollment features found in many defined contribution plans the fact that participation rates differ little doesn’t surprise us at all! The only thing that should matter is whether or not a participant’s account balance (accumulated wealth) is impacted for those with student loans. In fact, it is, as the CRR found that graduates with student loan debt at age-30 have accumulated nearly 50% less in their retirement accounts ($9,300 versus $18,200).

The long-term implications of that fact are startling. Let’s assume that the participant with student loan debt can only put in 2/3rds ($2,000 versus $3,000) of the annual contribution relative to a participant that has no student loan debt.  If both groups of participants begin with the average account size at age 30 reported by the CRR and earn 5% from age 31 through to age 65, the difference in lifetime retirement earnings will be more than $141,000 favoring those without student loans.

Bottom-line: Student loan debt may not restrict participation in an employer-sponsored plan, but it certainly impacts retirement wealth creation, and that is the only thing that should matter.