At the beginning of 2024 there were some changes to the employer side of the 401k contribution and student loan repayment. Well, for some companies that now allow an employee to get their “match money” to not go into the 401K, but to go toward matching what the employee paid toward a student loan that year. EX. If an employer’s match for say 4% each year would have allowed you to have an added $3,000 contributed to your 401K, assuming you too contributed the $3,000 at a minimum, you could have that employer match of $3,000 go toward the student load debt instead. Of course, you too would have had to put $3.000 at a min. toward that debt as well. Remember it’s a match. Not every company will allow this, because I am sure it’s a human resource challenge this early on with this new rule. Regardless, is this a good thing? There are several people dealing with huge student loan debt, and we hear a lot of conversation around it, like it’s not fair, its right and the government should forgive student loans for people taking jobs like teachers and social workers…
Hey, I get it! But we hear very little about “educating” people about financial literacy while in High School and how to make better choices as to the schools you go to. If you want to be a teacher, WHY would you go to a private college, assuming you are tsking out large loans. They will not pay you more because you spent more. Remember State Colleges are supplemented with tax dollars, that’s why they are less money. Don’t think that makes them less of a school. I also know state colleges are pricy too these days, but at least in most cases they are half the cost. If you need to piece it together and start at a community college for 2 years, that’s OK! But to sacrifice those early years of funds in your retirement account earning compound interest? I’m not sure about that. Most people are what experts say “behind” on their retirement savings. Do most people not understand the power of the longer your money is IN the market, vs the amount of money you PUT in the market? “The Money Guys” (Great podcast) https://moneyguy.com/ tell us for every dollar a 20-year-old puts in the market = $88 when they are 65! That’s AMAZING! I wish I was drinking that cool-aid when I was getting out of school! Of course, back in those days you had to give a blood and urine sample and swear on bible to get a student loan vs today. When my daughter was in school every Fall, she would get a “credit” on the bill which matched the Federal Student Loan amount each year. I would LOSE IT, and tell her, “Get down to that Bursar’s office and get that off!” I never checked that box on the FASFA! Here I am killing myself to fund that 529 plan for years, and they are giving “her” loans like candy! Thank God I was paying attention….Bottom line here, we need more education on the front end so people can make more informed decisions. Hey if you want to put blinders on and spend, spend, spend, in the early years and pick the most expensive college, Go at it! But maybe while you are picking that high-priced college you can also decide what bridge you want to live under in your golden years. Just saying… Make good choice and control what you can control.
two chicks talking money. 