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High Cost to Focusing on Student Loans Over Saving

New York Times

This week, President Obama ordered changes to the federal student loan program that could help millions of borrowers make their payments more affordable starting in December 2015.

In a short speech in which he used the word “outrage” twice, he noted that he and his wife, Michelle, paid off their own student loan debt only 10 years ago, when they were already saving money for their daughters’ college educations.

This household tug of war for every dollar a family earns has not been a big part of the discussion of the long-term impact of the trillion-dollar student loan debt overhang. And the Obamas are well off enough now that they no longer have to choose between repaying debt or saving for a down payment, college or retirement.

Most Americans, however, must prioritize. And even those with average student loan debts may end up sacrificing hundreds of thousands of dollars of retirement savings if early in their careers they devote themselves to repaying student loan debt without saving for anything else.