Author Topic: Pay off student loans early or fully fund retirement accounts?  (Read 1742 times)

MoneyCat

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Pay off student loans early or fully fund retirement accounts?
« on: October 03, 2014, 01:41:30 PM »
I did some calculating today and I will pay off my student loans in four years at my current rate of payment.  I could reduce that time to three years but it would mean not funding my retirement accounts at all for those three years.  What would be the best decision here?

I still owe $69,000 in student loans from Direct Loans.  It used to be much higher because I used student loans to pay for about 85% of my entire college and graduate school years (including living expenses).

schimt

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Re: Pay off student loans early or fully fund retirement accounts?
« Reply #1 on: October 03, 2014, 01:46:06 PM »
what do your interest rates look like?

Gin1984

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Re: Pay off student loans early or fully fund retirement accounts?
« Reply #2 on: October 03, 2014, 01:59:13 PM »
Fully fund the retirement accounts unless the interest rate is over 6%.

MoneyCat

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Re: Pay off student loans early or fully fund retirement accounts?
« Reply #3 on: October 03, 2014, 02:18:08 PM »
The interest rate on my student loans is 5.25%.  My employer does not match my 403b (because I am supposed to get a pension which will probably no longer exist when it would be time for traditional retirement.)

GetItRight

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Re: Pay off student loans early or fully fund retirement accounts?
« Reply #4 on: October 03, 2014, 03:42:00 PM »
If your employer matches anything I would contribute enough to get that and put as much as you can into paying off the loans quickly. I would prefer freedom and flexibility sooner.

Catbert

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Re: Pay off student loans early or fully fund retirement accounts?
« Reply #5 on: October 03, 2014, 03:51:14 PM »
You're pretty much in a grey area IMO.  >6% SL rate then pay the SL.  <5% let the SL ride.  5.25% is a toss up.

In you're in 25% marginal tax bracket then I would fully fund retirement accounts for the tax savings.

Since it's *only* one more year of SL payments, I think I would fully fund 403b.