Ask Jeni: Ideas for Maximizing The Employer Contribution

November 13, 2018

I’m trying to figure out the best way to maximize my student loan contribution benefit. My employer increases the monthly contribution amount each year. I expect to be done paying it before the 5 year employer contribution program is over. Any tips for how best to maximize the employer contribution? Right now I pay above the minimum payment, but I’m wondering if I should change my strategy to an income-driven repayment plan to maximize the contribution.

 

It sounds like you’ve been working hard to pay extra and repay your loans quickly, great work! It sounds like you have a clear goal to spend the least amount of money possible while paying back your remaining student loan balance. That goal completely makes sense.

Generally the sooner you can pay off your student loans the more money you save, because you pay less interest. But when employer contributions are made so that the contribution increases over time the picture is less straightforward.

Your student loan servicer can’t give you a lower monthly payment amount to maximize your benefit because their rules about repayment plans are somewhat fixed and they don’t have the ability to “plan for” the employer contribution.

Which means it’s up to you to determine the best way to use your benefit with the existing repayment plan rules you have to work within. So let’s start there.

The absolute lowest monthly payment you can make according to your student loan servicer is $350 per month under an income driven repayment plan. Your employer payments aren’t set up so they can be applied to your minimum monthly student loan payment. That means you’re left choosing between changing your repayment plan to an income-driven repayment plan to lower your monthly payment and increase the amount of repayment time to get the most of your National Grid benefit or continuing as is on your current repayment plan.

I encourage you to use the payoff estimators in the tuition.io wellness portal to see which option truly saves you the most money out of pocket. Then you can compare the impact each choice will have on your personal finances, good luck!