Should I Pay Off My Student Loans Or Invest?

19-10-2017 | Dojo |

Should I Pay Off My Student Loans Or Invest_

You just graduated college, with a hefty student loan and are now torn between 2 options: to pay off the loan or start investing early, earning enough to pay off the debt and also secure your future.

First of all – congratulations for thinking about various ways to handle your money issues. Let’s now see the pros and cons for both of these solutions:

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If you start investing


  • you COULD earn enough money to cover your debt and help you become financially independent.
  • if you start investing in a retirement plan, you’d be able to make quick progress towards securing your golden years
  • you could become a very successful investor and become rich


  • you COULD fail, like many do already, and lose your money
  • you’ll still be in debt, bigger by the day, since you don’t make payments.

If you start to aggressively pay off your student debt


  • maxing out your debt payment efforts will help you become debt free soon
  • after paying off your student loans, you can free up enough capital for investing


  • you will not earn more money via investments

What would Dojo do?

I think life in general and personal finance especially are not black and white, so there’s no rule stating you cannot invest some money while also paying off debt. Or that you can’t earn more money and redirect the windfalls towards your student loan payment.

I would consider debt payment as a priority.

I was in debt years ago and it was painful and frustrating. There’s not reason why anyone should prolong the agony. If you can crush your debt faster, then by all means do it.

What’s your higher interest debt? Crush that first. You’re losing more money each month (because of the increased interest rate), so it makes sense to go after it first.

Are you employed and your employer offers you to match your investment into the company 401(k)? That’s free money for  you, why not ‘take it’?

Can you start a side hustle and earn some money? Even better. Try and push all these earnings into your debt payment and soon you’ll become debt free.

Look for all kinds of opportunities to get into a better financial position: save money, sell stuff you don’t need, create your own small business at home, match your employer’s investment plans, even start investing on your own, if you’d like to try your hand, but never lose track of what should be your main goal: to become debt free as soon as possible.

What have you done in this situation? How did your student debt payment go?

Recent Comments

  • November 13, 2017 at 4:15 pm

    Thankfully here in the UK, the repayments for any student loans are taken automatically before your income is received in the bank. This is beneficial as it allows me to focus on doing what I see best with the remaining income and taking out the need for me to risk the money as some do with investing.

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