Pay Off Student Loan Debt or Save for Retirement?

Finally reaching the point where you have positive cash flow to be able to choose to pay off your debt or invest is never a bad thing.


But it often creates some tough decisions for people.

When you’re dealing with credit card debt with APR’s above 10%, it usually is an easy answer: pay off the debt. You’re rarely going to consistently be able to make over a 10% on your investments.

When you’re dealing with a very low APR, for example, student loan debt of 2-3%, the answer is also pretty simple. Invest. It’s fairly simple to earn more than 2-3% via conservative investments in the market.

But what about when you’re right around that 5-7% mark? That’s when it gets tricky.

Reader, Lisa B., write in:

“I have about $15,000 worth of student loan debt at 6.25% interest rate. I am 27 years old and getting married this year. My partner is 29 years old. We do not have any retirement savings, but we also do not have any other debt besides my student loans. We will have about $1500 a month in disposable cash starting in the fall. Is it better to put the money towards my student loans or towards a retirement plan?”


It’s a tough question that many of us have or will come across.

On one hand, being 27 and 29 and not having any retirement savings is a bit of troubling red flag. Sure, Lisa and her partner have time to catch up, but if they don’t start a retirement savings discipline now, when will they?

On the other hand, 6.25% is a rather enticing guaranteed investment return in today’s volatile market.

I thought I’d pass it along to the readers to comment to get a variety of opinion.

Should Lisa:

  1. Focus on paying off the student debt first, before saving for retirement?
  2. Focus on retirement and pay off the minimum monthly payments on the student debt?
  3. Do both at the same time?

What’s your take?


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