Debt Reduction in 2025: Why It Matters for Financial Planners

CFP® Board In The News

According to new research from the CFP Board, Americans are heading into 2025 with one financial goal top of mind: reducing debt. In fact, 97% of U.S. adults have set financial resolutions for the year, and debt repayment is the clear frontrunner.¹ This trend isn’t just a consumer sentiment shift—it’s a signal to financial planners that debt management will be a central client concern moving forward.

Why the Surge in Debt Reduction Now?

Several economic forces are converging to make debt a front-and-center issue:

Higher interest rates have made carrying balances on credit cards, auto loans, and variable-rate mortgages significantly more costly.²
Inflationary pressures have left many households reevaluating spending priorities and seeking long-term financial stability.
Economic uncertainty, including concerns over a potential slowdown or recession, has encouraged consumers to seek greater control over their finances. - Rising student loan obligations have resumed after pandemic-era forbearance, reigniting debt burdens for millions of borrowers.

What This Means for Financial Planners

For planners, a renewed focus on debt shifts how certain client conversations and strategies are prioritized:

1 Comprehensive Debt Assessments: Understanding not only the amounts owed, but the structure, interest rates, and behavioral habits behind a client’s debt is essential.
2 Interest Rate Optimization: Clients often lack awareness of how much high-interest debt actually costs them in opportunity terms.
3 Student Loan Planning: Advising on income-driven repayment (IDR) plans, public service loan forgiveness (PSLF), and refinancing options requires up-to-date knowledge.
4 Behavioral Coaching: Planners must be prepared to address the emotional and psychological aspects of debt, especially among younger clients.
5 Retirement Impact Modeling: Helping clients evaluate the tradeoffs between accelerating debt payoff versus increasing retirement contributions is an area of high-value advice.

Integrating Debt Strategy into the Planning Process

A 2024 Harris Poll survey found that 69% of Americans feel debt negatively affects their mental health.³ This underscores the holistic role financial planners now play—not only as technical experts, but as partners in long-term well-being.

Incorporating debt analysis into the six-step financial planning process aligns naturally with both CFP® practice standards and evolving client needs. Planners who are skilled at guiding debt reduction plans that factor in tax impact, investment tradeoffs, and life transitions will be particularly well-positioned in the years ahead.

Conclusion

The surge in focus on debt reduction is more than a passing trend—it reflects a meaningful shift in the financial priorities of U.S. households. For CFP® professionals, this means elevating debt strategy to the same level of importance as retirement, tax, and investment planning. Those who can guide clients through this priority with clarity, discipline, and empathy will continue to build enduring relationships grounded in trust and tangible results.

Sources:

CFP Board – Reducing Debt Is Americans' No. 1 Financial Priority for 2025: https://www.cfp.net/news/2024/12/reducing-debt-is-americans-no-1-financial-priority-for-2025-cfp-board-research-finds
Federal Reserve – Consumer Credit Report, 2024: https://www.federalreserve.gov/releases/g19/current/default.htm
CNBC – 69% of Americans say debt affects their mental health, new survey finds: https://www.cnbc.com/2024/05/10/americans-say-debt-hurts-mental-health.html