Student loan debt pay or invest?

If you know how to reliably make >7%, more power to ya. I don't which is why I'm heaping all my extra money onto my student loans - my most expensive debt.

I have right at 290k and will start repayment next July. I have some below 5%, some at 6.8% and some at 9% (private). I can refinance at 5.5-6% for 15 years. I could get a little lower with variable rates but I have no idea about these things. I am thinking doing that for everything above 6 and paying the others off for 20 yrs. Then probably finish them off year 16-17.

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What would the cutoff interest rate be for paying the loan out over time vs knocking it out early?

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I'd put the numbers in a spreadsheet. Ordinarily I'd agree that 7% is a pretty damn good after-tax return, especially considering that it's a guaranteed return.

OTOH if you don't have long to pay it all off it might be better to get started on your tax-deferred investment accounts now since you'll be earning interest presumably for your entire working life.

I'd certainly put some into a Roth anyway simply because you have to start building up a stash for a rainy-day fund regardless.

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I have right at 290k and will start repayment next July

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frick

On a similar note, how much do you feel should you have liquid in tappable equity/investments before pouring all you have extra into debt?

I would make sure to max out your 401k employer match first. I think the high interest debt has to come next (anything over 6% or so, especially if it's not tax deductible). After that, i would be sure to max out all of your tax advantaged vehicles (401k, backdoor Roth, 457b, 529s for the kids, etc. if applicable).

I'm in a similar boat as you, but have it all consolidated at 4.75%. I'm currently paying back whatever's leftover after funding all of the other stuff. I won't start saving in a taxable account until the loans are gone. I am a bit aggressive about not keeping a lot of cash on hand in terms of an emergency fund, but i have about 40k in equity from a HELOC that I've paid down, which I can tap if necessary. Also, the Roth and 457 could be tapped without penalty in case of an emergency.

Not saying that my plan is the best, but i have put a lot of thought into it and hope it helps you.

I am with you Doc. All my dependents might not appreciate it though. Hope all is well.

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290k

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This makes me feel good about my wife's 100k . I personally feel like paying off student loan debt is always the better option. With other loans,especially a mortgage, you at least have the chance of the house appreciating in value. So if you don't pay any extra and invest, at least you have the value you are putting in your home if the investments don't pan out. With a student loan, you are accruing interest, and if you aren't seeing any benefits on your investments, you just racked up a ~6% on 290k. That's 17k gamble per year. To rich for my blood.