| The new Health Care and Education Reconciliation | | | | prudent choice. Often though, this is not the best |
| Act will overhaul the existing student aid system and | | | | plan. Eight percent is the magic number to consider. |
| should help future students not to get themselves in | | | | This is currently the average long term return the |
| such a financial bind many current students and alumni | | | | stock market has been yielding. If the student loan is |
| now face. That is all fine and great but what about all | | | | costing more than eight percent, it would be wise to |
| those people who currently have a load of student | | | | direct disposable income towards loan repayment |
| loan debt? After all, two thirds of all college students | | | | rather than investing for retirement. |
| borrow money to get their education and their | | | | If a loan is less than eight percent, the second option |
| average debt last year was over $23,000. There are | | | | of saving for retirement and making minimal loan |
| many decisions on how to tackle that debt as one | | | | payments may work best. One will have more |
| embarks on a new career fresh out of school. One | | | | money in the end because they will earn more from |
| decision involves choosing how much to invest in | | | | their retirement account than they would have paid in |
| retirement savings as opposed to quickly paying off | | | | loan interest. |
| the education loan. There are three choices: first pay | | | | Of course, there are other things to consider. The |
| off the loans and then save for retirement, start | | | | average stock market return is variable. The housing |
| saving for retirement now and only make the | | | | market bubble over the last couple of years caused |
| minimum payment for each student loan, and finally | | | | a decrease in that rate of return that the world is still |
| proceed in the middle splitting your expendable | | | | recovering from. So, that eight percent should really |
| money between retirement savings and loan | | | | be considered a fuzzy magic number. Also, one may |
| payback. | | | | consider the peace of mind in retiring a student loan |
| Immediately paying off the financial aid to get the | | | | worth the extra cost. |
| monkey off the back is a popular and seemingly | | | | |