Student loans

The financial toll on families from the dreadful economy of recent years is enormous.

With interest rates on some student loans about to double, the Obama administration joins with colleges to provide clearer guidance on the real price of school.

I returned to graduate school and accrued about $45,000 in federal student loans. The interest rate on these 10-year loans is 6 percent, with repayment beginning in 2013. I also have a 401(k) worth about $100,000 (roughly $60,000 of my contributions and $40,000 of employer contributions). I realize that an early 401(k) withdrawal would result in a 10 percent early-withdrawal penalty and that any withdrawal would be considered taxable income. This would effectively reduce the amount the 401(k) would need to earn in order to be the better investment. Still, it can't be much less than 6 percent, can it? Is there anything about my assumptions that are wrong, or is there anything I am overlooking? Derek, Chicago, IL

My wife and I have taught in Alabama public schools for the past 2 years and have made (forced) contributions to the state retirement system in that time frame. Together, we've got around $8,000 invested in the state retirement system. Realizing the limited income prospects for career teachers, we both applied and were accepted to a top 25 law school on full-tuition scholarship. My question to you is this: For my retirement account, I have the option of either a) taking a lump-sum payment of the $8,000, minus 20 percent in federal income tax, or b) rolling it over into a 401(k), IRA, or similar long-term savings plan. Should I take the money and run, or should I start building a retirement nest egg while I'm financing the rest of my life with borrowed money? Alex, Montgomery, AL

My wife and I recently refinanced our home. We paid off the home equity line and the existing mortgage, and now our monthly payments are $500 less than they were previously. What should we do with these savings? Thank you. Jeff, Amherst, MA

Did I hear you say on one of your previous programs that seniors who have been paying on student loans for 10 years or more can have the debts dismissed? Mine are a consolidation of federal loans and I haven't missed a payment in the past 10 years. Helen, Portland, OR

I am extremely in debt with my student loans. At Age 25, I am wondering about the best way to resolve this debt. I currently have a part-time job and make less than $600 a month. How do I go about refinancing with such little tangible income? Jennifer, New York, NY

I am 26 years old and recently graduated from grad school. I have about $28,000 of loan debt, from both undergrad and grad school. My deferment is up next month, and without changing or consolidating anything, I will owe more than $500/month. I work for a non-profit and cannot make that high of a payment. I know I have some options for repayment and consolidation. I am trying to find a balance in which I am paying what I can afford each month, but not extending my loans so much that I am paying an absurd amount of interest. Elisa, Bozeman, MT

Republicans want to use money for preventive care to cover lower interest rates