Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in

Ask Dave

Invest or Pay Off?

Dave tells Michael to be done with the student loan ASAP, not to keep it around like a pet.

QUESTION: Michael has $120,000 in student loan debt and makes $45,000 a year. He wants to know if he should make payments on the student loan and invest instead. The rate on the student loan is only 2.6% ... is it worth it?

ANSWER: I strongly believe you need to be done with the student loan as soon as possible, regardless of the interest rate. If you were debt free, I wouldn’t go borrow $120,000 to invest. I know that there’s a spread there, but you are adding risk and strain to your life that you wouldn’t have if you were rid of the student loan.