My company is taking away its Safe Harbor 3% contribution beginning next year (long story - within 3 years we went from 10-12% contribution to 0% regardless of employee contributions).

Does this change your investing strategy? I'm already maxing out Roth and HSA. Have about $210k in student loan debt (variable with LIBOR at 5.3% currently) and am already paying an extra $250 a month on that.

Would you take the ~$500 that was going to 401k and put that towards the loan for an extra $6k a year on top of the already extra $3k/yr?

My raise hits on this month's paycheck and I was already planning on an additional $500/mo for the student loan, so I would effectively be paying $1250/mo in principal ($15k/year) instead of $750/mo ($9k/yr)

So:

Option 1: continue funding 401k at 5%, put extra $500 into loan principal for $750/mo extra

Option 2: taking 5% and apply to loan to get approximately $1250/mo into loan principal include the extra $500 from raise.

Thoughts?

Hmmm. I would almost always advocate continuing to make the 401(k) even without the match, but you present an interesting scenario with so much debt.

I think I would still make the 401(k) contributions if your wage/earnings growth is expected to be high. Essentially you can't make up a year of skipped contributions, but you can make larger and larger extra payments on the debt with future higher income.

From quick math you are paying at a rate that will be going for 30+ years. Once maxing out 401(k), Roth, and HSA, I would cram every available $ to pay down that debt before LIBOR makes them completely unbearable.

If your expected earnings growth isn't strong, I might change my tune.

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Hmmm. I would almost always advocate continuing to make the 401(k) even without the match, but you present an interesting scenario with so much debt.

I think I would still make the 401(k) contributions if your wage/earnings growth is expected to be high. Essentially you can't make up a year of skipped contributions, but you can make larger and larger extra payments on the debt with future higher income.

From quick math you are paying at a rate that will be going for 30+ years. Once maxing out 401(k), Roth, and HSA, I would cram every available $ to pay down that debt before LIBOR makes them completely unbearable.

If your expected earnings growth isn't strong, I might change my tune.

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I'm a lawyer in a semi-niche market, so I'm doing well right now with healthcare. I always have the ability to lock the loan into fixed whenever I like for no fee according to them.

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Thoughts?

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$210K in student debt? Man.. I'd pay the minimum and let your heirs figure that one out.

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Straight line 20 year repayment schedule, currently already planned to be repaid in 18 on current overpayments.

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Hmmm. I would almost always advocate continuing to make the 401(k) even without the match, but you present an interesting scenario with so much debt.

I think I would still make the 401(k) contributions if your wage/earnings growth is expected to be high. Essentially you can't make up a year of skipped contributions, but you can make larger and larger extra payments on the debt with future higher income.

From quick math you are paying at a rate that will be going for 30+ years. Once maxing out 401(k), Roth, and HSA, I would cram every available $ to pay down that debt before LIBOR makes them completely unbearable.

If your expected earnings growth isn't strong, I might change my tune.

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I'm a lawyer in a semi-niche market, so I'm doing well right now with healthcare. I always have the ability to lock the loan into fixed whenever I like for no fee according to them.

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That is a good feature to have in your hip pocket. With all of the extra payments you are making, it make me wonder(er) if you can recast the loan in the future. Some loans allow this at any time for a modest fee and it might already be built into the loan if/when you convert to a fixed rate. That would certainly help manage payments through lower income periods (or at least lower free-cash-flow periods).

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Thoughts?

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$210K in student debt? Man.. I'd pay the minimum and let your heirs figure that one out.

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Straight line 20 year repayment schedule, currently already planned to be repaid in 18 on current overpayments.

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I don't think not contributing to 401k for 20 years is even an option.. that is way too long to not save.

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Thoughts?

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$210K in student debt? Man.. I'd pay the minimum and let your heirs figure that one out.

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Straight line 20 year repayment schedule, currently already planned to be repaid in 18 on current overpayments.

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I don't think not contributing to 401k for 20 years is even an option.. that is way too long to not save.

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I ran a calculator assuming non-changing LIBOR of 5.3%:

extra $250/mo shaves off 4 yrs, 7 mos (paid off 10/2031)

extra $750/mo shaves off 9 yrs, 4 mos (paid off 01/2027)

extra $1250/mo shaves off 11 yrs, 10 mos (paid off 7/2024)


I could take the raise and bump my 401k to 10% and just keep the $250/mo extra payment as is.

Here is a wrench in the 401(k) plan too that may push you to the lower contribution amount. How many of the lower income employees contribute to the 401(k). Do you think it will pass the means/qualification testing?

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Here is a wrench in the 401(k) plan too that may push you to the lower contribution amount. How many of the lower income employees contribute to the 401(k). Do you think it will pass the means/qualification testing?

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None. I'm pretty sure it's going away completely and we will be forced to move to a completely self-funded retirement plan.

Then I think you should consider Option #3 - find a new job.

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Then I think you should consider Option #3 - find a new job.

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I work for physicians that all just went IC. There are only two W2 employees here - me and my general counsel.

That's why 401ks and the plan admin on them is such a pain in the rear.

To OP, in a word, YES.

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$210K in student debt? Man.. I'd pay the minimum and let your heirs figure that one out.

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If the loans are Federal they go bye bye upon death. Several private lenders offer debt discharge upon death. The one's that don't can go after the remainder of the estate upon death. However it gets real messy if there is a cosigner.

ever looked into a job that would meet PSLF criteria?

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ever looked into a job that would meet PSLF criteria?

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Not willing to take the pay cut for 10 years. I have friends from law school that are in PSLF jobs and make 1/3-1/2 of what I do with 2 more years of experience in their positions.

I'd pay myself before I paid the government.

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I'd pay myself before I paid the government.

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Private loans, not Feds.

Okay, I'd still pay myself before I paid the bank. Stack it up now and let it compound.

Your sallie maes ***** until you pay them.
I'd pay them.

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Then I think you should consider Option #3 - find a new job.

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This is the only right answer on this thread. If they are taking that away then other benefits being cut are right around the corner. I would question the solvency and culture of your company if they are considering this.

Wow.....talk about some major presumptions.

I would keep paying into 401k and lock in a rate. Why wouldn't you lock in a rate right now if you can?