I was well on my way to paying off my student loans early – here’s why I would not do it

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I graduated with $ 19,000 in student loan debt, which looks like a drop in the bucket compared to the rest of some other students reaching six digits or more. However, a $ 19,000 note was enough to terrify any recent graduate.

Getting student loans was a necessity for me to go to college. My family otherwise could not afford to attend a public school a few hours away from home. In the beginning, my goal was to get rid of this debt as soon as possible. I would consistently make monthly payments above the required minimum amount, in an effort to achieve this goal.

In fact, I was so aggressive about not being charged that a financial developer I spoke to actually told me that I did not have to struggle to pay the rest so quickly. As he put it, my interest rate was low, so it was good to prioritize other things.

At the time, however, I felt extremely uncomfortable with the idea of ​​carrying debts and could not wait for the day I would make my last student loan payment and close my account. Her words did not carry much weight with me – I still believed that I would feel more secure financially by paying off my debt quickly.

Over time, however, instead of wanting to pay off my balance within a year, I decided I was in a better position to pursue other goals. And while the low interest rate was a factor in my choice, I had some other, stronger, awareness that eventually stabilized my decision.

My federal loans have a low interest rate

Federal student loan rates change every school year and have been declining over the last decade, however, there have been some years where interest rates have actually risen. If you made a subsidy student loans for the school year 2009-2010, for example, you may have received a fixed interest rate of 5.60%. However, if you had received a subsidized federal student loan for the 2015-2016 school year, the interest rate could have been around 4.29%. The 2020-2021 school year actually saw the lowest fixed interest rate on subsidized federal student loans: 2.75%.

The interest rate on my federal loans is about 3.7%. And because I have already paid off most of my balance since I graduated, my interest charges are quite manageable. Therefore, I feel comfortable just making monthly payments that are slightly above the required minimum amount as opposed to throwing a lot more money into debt.

I have no other forms of debt

I became more comfortable carrying debts

I could have a better return on my investment

I once made monthly payments that were much higher than my minimum, in an effort to get out of debt faster. But I realized that throwing extra money into my student loan debt instead of investing opportunities, I was getting faster debt relief, but I was not building my assets faster. And seeing that I want to be first millionaire in my family, it was important for me to start investing more.

I really had an experience where I made a pretty large student loan payment (well above the required minimum amount) and realized too late that if I invested that extra money in a stock I was looking for and thinking of buying, I would have tripled the money more than a year later (note that tripling your money in less than a year is not uncommon).

I follow a long-term investment strategy, however, I know that every year makes a difference when you try to build your wealth. And seeing that I never knew before how to save for retirement and build wealth or why any of this was important, I felt I had to start earning as soon as possible. I started dynamically with my brokerage account and the Roth IRA faithfulness (and track my progress with Mint app) but I still have a long way to go. So I decided that what I really needed to do was learn how to pay off my student loan debt if it meant I could increase my investment much faster.

Opening an account with a robo-consultant like Wealth front and Improvementor investment application such as Robin Hoodcan be an easy way to start investing extra cash for the future.


I intend to invest my money as long as I pay off my student loan debt, however, I will not make the loan payments as aggressively as before.

The fact that my loans have a low interest rate and I have no other forms of debt puts me in a position to feel emotionally and financially comfortable carrying my debt longer. Now, I’re going to redirect extra money that I would use to make bigger payments to my investment goals.

Editorial Note: The opinions, analyzes, reviews or recommendations expressed in this article are those of Select publishers only and have not been reviewed, approved or otherwise endorsed by any third party.

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