Monthly Review: Pay Off Student Loans or Build Up A Nest Egg?

In our monthly review, we round up relevant events that occurred in the news and go over what happened, what those events mean for you, and what you can do about it.

Today, we’ll be reviewing Forbes’ article on whether to allocate your savings to your student loans or to your nest egg. You can read the full article here.

What happened:
• Forbes discussed whether you should pay off your student loans first or contribute to your nest egg

What it means for you:
• Takeaways:
-If you have loans that have an 8% interest rate or higher, focus on paying down your loans first
-If you have loans that have a super low interest rate (e.g. 2 or 3%), you might be better off putting that money towards your retirement

What you can do about it:
• If you have low interest rate student loans and an employer 401k match, you’ll end up with more money overall by contributing to the 401k, so max out your 401k
• If you have higher interest rate loans, look into refinancing, but keep in mind that if your loans are public and you refinance through a private lender, you could lose some of the special protections federal loans carry (e.g. deferment and forbearance)

Questions? Email or tweet at @getgreenshield here.

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