Pay off private student loan or invest?


I have built up a $10k emergency fund, however I also have a $12k private student loan at a 4% interest rate, $283/month payment. I am late to investing (I just started a few months ago and am 33) and I only have about $2500 total invested so far in my company’s Vanguard 403b (no employer match) and my own Vanguard Roth IRA.

Should I be throwing everything at my private student loan and use a portion of my emergency fund to knock it out sooner, or be focusing on putting as much as I can into investing instead while just making my regular loan payment? I’ve seen so much differing advice on this, so I don’t really know where to focus. I do need to prioritize since I’m only pulling in $50k a year right now.

Hi Jennifer!
Based on this post and this post, Jeremy prefers paying off student loans before emergency funds and investing.
There are conflicting opinions from different smart people about this topic, so at the end of the day you should do what makes you feel comfortable. Also, at age 33 there is still LOTS of time!


Yes, I would knock out that student loan ASAP. Decide what E fund you really need to keep (maybe $2K?), put the rest toward your debt, and every penny you can spare for the next few months & you’ll be debt free, and able to replenish the emergency fund and invest an extra $300+/month going forward!


Hi Jennifer, like Vivi said, lots of different opinions out there.

My question is… do you really need the whole $10k in EF? Can you shoot for just a “basic essentials” EF i.e. if you were unexpectedly laid off (you will receive unemployment benefits as well), etc., etc. Basic essentials meaning just to help cover mortgage/rent, utilities, food, etc. (so perhaps you can shave it down to $7.5k?) Secondly, do you have a back up plan like a family member that can support you for a few months in case of an emergency? Thirdly, maybe ask a family member to borrow some cash w/ 2% interest & monthly pay back plan (you’re saving 2%, they’re earning 2% (tax free & HYSA is only at .50%), win-win situation for both parties). During the market crash last March, I borrowed some cash from my sister and paid her back in 3 months plus interest (I used that money to buy a lot of stocks for a discount & I’m up huge now). These are just food for thought… to help you think outside the box or w/ a different “lens”.

In my current situation, I took over my parent’s HELOC debt (3.99% simple interest) in November of 2020. There was an experiment done on Mr Money Mustache’s blog about a mortgage payoff vs. investing in the market (the stock market was winning). I did my own experiment and instead of fully paying down the HELOC, I poured $20k into the market (VOO, ARKg, ARKk). Currently, I’m up as well and I strongly believe I will be up positive in the short, medium, & long term. I would not recommend anyone to take out a loan to do this but I was in a unique situation & had the opportunity to do a real life experiment. I definitely feel that there is some stress of having this debt & paying it off would a good choice as well. I am looking to pay this off in 11-13 months if not sooner…to be determined.

Bottom line, go with your gut. Whatever decision you make, it’ll be the best decision. Take everyone’s opinion & advice with a grain of salt because they are not in your situation. By the way, I started at age 42 w/ only $49k in retirement and $0 in savings/investing. I’m 49 now & I’m at $847k. Many thanks to Jeremy/PFC team for providing really sound, solid advice for me during my FI journey. So smile, $2.5K at age 33 is ALOT of money.

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Thank you all for your responses! I paid off 75% of it today and I’m planning to pay the rest within the next few months and finally be done with it. Feels good!!!