I was recently asked to comment on the advice provided in this video. In short, it’s horrible advice. This is a prime example of why I cannot recommend blindly following the advice of radio entertainers who are brand conscious and common sense deficient.
The proper advice anyone with the person’s best interests in mind would be to take the money she has saved that could pay off her student loans and put it into a safe investment instrument, such as a high-yield bank savings/CD account or Treasury I Bond that has a shot at keeping up with inflation rates, for the next 7 years while her employer continues to pay off her loans. This way, she has the money readily available to pay off the loan if she loses her job for any reason and desires to be debt-free while seeking new employment. Of course if she doesn’t lose her job, she will not only earn a few hundred dollars in interest after seven years, but will have her original $21,000 available AND have $21,000 of debt eliminated as well once her employer finishes paying off the student loan. I simply don’t understand why someone would continually advise people to forgo components of their employee benefits, like student loan payments and 401k contributions that are met with employer matching funds, unless that individual has self-interests of saving money by discouraging his own employees from accepting components of their individual benefit packages.
It’s easy for millionaires to shrug off a $42,000 swing (the loss of her employer’s payments + her savings). But being a bit more strategic and patient will generate a substantial return for those who don’t consider $20k as a trivial amount.