low interest rates...continue 401k contributions instead of saving for school?
I'm debating what I should do... interest rates are at a record low. I can get a student loan for about 4%, using my fathers home equity as collateral/co-sign. Much lower than the 6.8% the federal loans offer.
My thought is that contributing to my 401k is like getting an instant 20-30% return on investment, since it is pre-tax money, not to mention the interest earned over the next 5 years. However, I can't touch that money for decades. (but I can always take money out of 401k with a penalty fee, if I end up in a bad situation)
Also worth noting is that my company's 401k match is a joke, I've calculated I'll be missing less than $1000 in company match.
Originally I was planning to stop contributing to 401k, because I'll need every penny for grad school, but with interest rates so low, I'm debating whether that is such a wise decision.
At the same time, sometimes I think there is a psychological aspect to this as well. Having less debt, can reduce stress, worries, pressure to obtain a job that pays a certain amount, instead of finding the job/company that fits me best....essentially just energy that can be focused towards more positive things.
I would appreciate anyone's thoughts on this...