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College Question

By Terry Savage on August 25, 2020 | College Savings / Student Loans

I have money in a 529 but not enough. I know there are penalties, but why not pull from my 401 K rather than have loans forever? I pay 10%, but that will be less than the interest.

Terry Says

That doesn’t make sense. The interest rate for all new federal direct undergraduate student loans decreased to 2.75%, down from 4.53% in 2019-20. That rate is fixed for the life of the loan.
Before you ruin your own retirement and mess up your children’s education go to www.SimpleTuition.com and learn the real costs of student loans — now and over future years. And a warning: Don’t take out PLUS loans if your child doesn’t qualify for subsidized Federal student loans. PLUS parent loans carry the highest rates and fees. Consider community college this year to save money since it’s almost all online anyway!

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