The whole reason you go to college in the first place is to give yourself a better future. You have big dreams to work hard when you’re young and retire early and enjoy the rest of your life without stressing things like financial stability.
So you take a student loan, so sure you’ll get a perfect job after graduation and can pay it off again without losing.
Unfortunately, life is not always so tidy and now you find that you are one of 44.2 million people whose lives are held back by federal or private student loan loans.
And retirement is getting closer from day to day.
You have three obvious choices when considering how to deal with student loans vs. retirement – and for those who know doing your homework does not stop when you throw your graduation cap in the air, there is a fourth option to consider.
1. Loan now, retire later
For many, this is the best option. Sure, this will tie up the funds for now and now – something you really need to consider if the future holds a mortgage or pram. But if you can scrape it now, you might just come out on top in the future.
By focusing on repaying student loans as soon as possible, you’ll save a lot of money you pay, which often means meaningful change.
The weakness of this approach is obvious.
More often than not, a job with a perfect high salary does not fall out of the sky once you graduate. If you find yourself in a job to do right now while you’re out of college, chances are you do not have much money to put into your student loans.
Prioritizing paying off student loans will also tie up a lot of your money for the near future, let alone a longer future. Retirement is the last thing you have in mind and if you are not careful, it will sit behind the stove for too long.
2. Pension now with minimum loan repayment
Some people choose the opposite approach.
By prioritizing savings now, you have the comfort to know that you always have a safety net there when you need them.
However, you can not just ignore student loan payments. You still have the minimum payment you need to make each month.
Moreover, the longer you wait to deal with your student loans, the more you end up having to pay interest, making this option much more expensive in the long run.
3. A little of both
This is a middle ground and many people consider this a happy medium between two extremes.
You pay a little more than the minimum on your student loan each month and then put a little into savings for retirement.
In the end, you will pay a portion for the interest, but you will also have a healthy pension.
4. Forgiveness of the loan
Forgiveness of student loans is an option that no one realizes.
While this is not a free card that is not tied to a rope, as this may be a very viable option for you to see.
Some programs offer to forgive the entire loan amount, together with unpaid interest. Others work by forgiving the remaining balance of the loan at the end of the repayment period.
You know it’s important to pay off your debts and save for the future. Now you know your choice.