Student Loans or Investing?


I used SoFi personally- great company to work with


I tried SoFi, but didn’t get very good rates. Most, if not all were upwards of 6-7%.


Dang, rates have went up since my refi last year, but I thought they would still be competitive and under 5.


I paid the minimum over many years on my student loans. But my rate was just over 2%. At 5%, I like the idea of paying half towards debt and investing the other half. I don’t think there’s a wrong answer here.


It’s horrifying!


I literally just finished a post in the “What’s one personal finance truth you believe that everyone else thinks is crazy?” thread about how I don’t think it’s necessary to pay off your student loans before you start saving/investing for FIRE. I have about $23,000 in student loans at 5.2%, but I’m focusing on saving in tax-advantaged accounts rather than paying off my student loans. I put about $1,200 - $1,500 per month into these accounts, which could theoretically go towards my student loans and have them repaid in just over a year, but the fact is that they aren’t costing me nearly as much in interest as I save in taxes by utilizing these tax advantaged vehicles. I ran the numbers and came out ahead even if my return is lower than my interest rate on my loans, thanks to the tax savings. I also prefer the idea of building up cash resources that I could tap into if necessary, rather than just reducing a liability.


That’s definitely something I’m considering, too.


@thebigcheese re Earnest: You’re going to need a better debt-to-income ratio than me. I was rejected for that reason, despite my glorious, unfettered credit history and the fact that about 60-70% of my salary would be available for student loan payments if the need arose. Go figure! :confused:

(Nothing against Earnest - I am a bad gamble, on paper, considering I owe ~$360k between student loans and mortgage and my current salary - aside from side hustles, bonuses, origination fees for finding clients, etc. - is only $55k. Yet somehow, I’ve increased my net worth by ~$100k in a bit over a year, so I’m pretty sure I’m an extremely safe bet lol)


Take a zero off the debt, and that’s where I sit. I’ll have to check it out!


Great advise here.

Personally I’m more partial to looking at my goals and asking which option advances them further: as opposed to whats purely exciting or not.

As an example, I’m normally a numbers guy, but my wife and I have discussed that our current goal is to eliminate monthly payments and have me become a stay at home father. As we’re using a hybrid:

  1. Pay debts off with annual rates that exceed average market gains.
  • Invest in a 100% stock debt betterment goal for anything with an annual rate below average market returns.
  • Once the betterment debt goal equals the total amount of our remaining debt we’ll withdraw to pay the debt off.


If the company has a match I would contribute to get it. If its $1 for $1 that’s 100% return. After the match pay off those loans!


I understand where you are coming from about worrying about missing out, I felt the same way. However, now that we’ve been rid of them, we’ve really been able to take advantage of lifestyle changes that we wouldn’t otherwise be able to. About 3 & 1/2 months ago I was actually able to become a stay at home dad since we were able to make the financials work. This is huge since I get to spend an awesome amount of time with my 2 girls now and now I get to spend all my creative energy writing and working towards my passions!

You may feel that it will take 2-3 years, but you’d be amazed at how fast it goes when you get intensely motivated towards a goal and put all your energy at it!

Either way you go, you are building wealth and aren’t blowing the money, so you’re definitely in the winners circle regardless!


I looked at paying student debt off as a guaranteed return (much like was stated above). The way I would decide where to put the $1000 is as such. Imagine as if the student loan is the bond portion (presumed to be relatively low risk investments) of your portfolio. That way you could take say 30% of the $1000 ($300) and put it towards debt and the other 70% can go towards more aggressive investments (for instance a Vanguard Total Stock Index Fund). Bam. Build wealth and pay off debt. You will get the return on the loans while investing too.

Another thought is that if any debts are >5% to just pay them off. My wife had 2 loans at > 5% and we worked aggressively to pay them off because a 5% guaranteed return is pretty sweet!

Hope that helps!

  • EJ


A lot of good advice here. Like a few others, I would personally pay off the debt to get the weight off my shoulders. However, whenever I have trouble making a decision about something, I try to figure out a way to split the difference, do a little of both things so I don’t have to choose one over the other. My husband has an annoying expression, “It’s not like it’s binary.” You can do a little of this and a little of that.


A couple of months ago, I had a change in perspective and started thinking of paying off my debt as investing. After all my goal was to finally have a positive net worth and whether it was investing in assets or paying off debt it would do the same for net worth.


It surely needs to bean optimum combination of both strategies. While opting for the snow-balling option, you must also make the most of small investment options. They can certainly help make your golden years simpler and smoother.