The retirement plan was almost certainly making less risk-free interest than the interest he'd effectively make (risk-free, hence apples-to-apples comparable) b

The retirement plan was almost certainly making less risk-free interest than the interest he'd effectively make (risk-free, hence apples-to-apples comparable) by paying off the student loan. When the difference in interest is great enough it's financially prudent to cash out the retirement plan to pay off the student loan.