"Should I pay off my student loans or start investing?" doesn’t have a universal answer, but it does have a concrete framework: compare a guaranteed return against an uncertain one.
If a loan charges you 6% interest (a hypothetical example — check your own loan’s actual rate, which varies by loan type and origination date), every extra dollar you put toward it saves you exactly 6% a year, guaranteed, for as long as that debt would otherwise have accrued interest.
The higher your loan’s guaranteed interest rate, the stronger the case for paying it down first, because you’d need an uncertain investment to beat a certain rate just to break even. A very low-rate loan tilts the comparison the other way. Many people split the difference — paying more than the minimum on debt while still starting to invest something.
This is a framework for thinking it through, not personalized advice for your specific loans. The 6% loan rate used below is a labeled hypothetical example, not a current real rate — check your own loan’s actual terms.
Not always — it depends on the loan’s interest rate. A high-rate loan is a strong case for paying it down first since that return is guaranteed. A very low-rate loan tilts the comparison toward investing sooner. This lesson gives you the framework, not a one-size-fits-all rule.
There’s no universal cutoff — compare your loan’s actual rate (check your loan servicer, since rates vary by loan type and origination date) against how much uncertainty you’re comfortable taking on for a potentially higher but unguaranteed return.
Yes, and many people do: paying more than the minimum on debt while still contributing something to investments, rather than treating it as all-or-nothing.
Investor education only — not investment advice, and never a promise of profit. Every investment can lose value.