I used to sit on my couch and stare at my student loan app. I’d run the same question through my head. Should I kill this debt fast? Or put more cash in the market? Here’s a full breakdown of that exact dilemma if you want to dive deeper.
I’ve tried both. I’m Kayla, and I’m a real person who paid off some loans, kept others, and invested along the way. Here’s what actually happened to me—numbers and all.
Quick background so you know where I’m coming from
- I left school with about $30,000 in student loans.
- Two chunks: $18,000 at 6.8% and $12,000 at 3.2%.
- I had a 401(k) at work with a 5% match.
- I kept a small emergency fund (about 3 months of bills).
- I used autopay for a tiny 0.25% rate cut. It’s not huge, but why not.
I also kept a simple spreadsheet. Nothing fancy. Just dates, payments, and a note when I wanted to cry. Kidding. Mostly.
My simple rule now
- If a loan is above 6%? I hit it hard.
- If a loan is below 5%? I pay it on schedule and invest extra.
- If my job matches my 401(k)? I always take the match first. It’s free money.
- If I’m going for forgiveness (like PSLF)? I pay the minimum and invest the rest.
Is that perfect math? Not always. But it worked for my brain and my wallet.
If you want to compare even more payoff and investing strategies, the free calculators and guides at Occupy Student Debt are a solid place to start. For another perspective, check out NerdWallet’s side-by-side analysis on whether to save, invest or pay off student loans sooner.
Real example: I attacked the 6.8% loan
That $18,000 at 6.8% bugged me. It felt loud. My standard payment was about $207 a month on a 10-year plan. I started tossing an extra $150 to $200 at it each month.
- With the extra payments, I paid it off in a little under 3.5 years.
- I saved around $4,000 in interest compared to the 10-year plan.
- My stress dropped fast. I slept better. That matters.
Seeing my balance shrink instead of creep up finally felt like progress—something I wish I’d understood sooner after reading about how ballooning balances can snowball on other borrowers in this personal story of a growing Howard University bill.
Small trick: I set biweekly payments. Two smaller hits each month felt lighter than one big one. Weird, but it helped.
Real example: I let the 3.2% loan ride and invested
That $12,000 at 3.2%? I kept the regular payment (about $117 a month) and started investing $200 a month in a Roth IRA. I used a broad index fund. Think “own a slice of the whole market” level simple.
Over about five years, I put in around $12,000. With market growth, my balance sat near $13,500 when I checked. Some months it slid. Some months it jumped. That’s markets. But here’s the key: the interest on that low-rate loan was about $1,000 total over 10 years. So investing made more sense for me there.
Why I never skip the 401(k) match
My job matched 5%. I grabbed it. If I put in $3,000 that year, they put in $3,000 too. That’s a 100% return right away. No stock pick needed. I still laugh at how many people miss this because they’re scared of the forms.
When I paid debt super fast
Two times I went hard:
- High rate loans. Anything near 7% felt like my money was on fire.
- When I craved peace. There’s a “sleep factor” you can’t see in a calculator. My mom calls it the “sleep tax.” You pay for quiet. Sometimes it’s worth it.
I also refinanced one small private loan (not federal) when rates were low. I used a well-known lender and dropped it from 7.2% to 4.9%. That helped. I would not refinance federal loans to private because you lose protections and forgiveness paths. That trade didn’t sit right with me.
When I invested first
- During the federal payment pause, I stashed cash in my Roth IRA and 401(k).
- I still paid minimums on the low-rate loan.
- I also used an HSA one year. Triple tax perks feel boring to say, but they’re sweet in practice.
If you work in public service and qualify for PSLF? My friends who went that route paid the minimum on an income plan and invested the rest. Makes sense, since you want that balance forgiven.
Tiny systems that made it easier
- Round-ups: I rounded payments up to the nearest $50. No thinking.
- Autopay on payday: money moved before I could talk myself out of it.
- Side cash: I sold old camera gear and used that on the 6.8% loan only.
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- “No shame” budget: I kept $25 a month for treats. Coffee, a plant, a matinee. Keeps the plan alive.
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You know what? A plan you can live with beats a “perfect” plan you quit.
What I wish I knew on day one
- Make a small emergency fund first. Debt and no cash is scary.
- List loans by rate. Use the avalanche method: highest rate first.
- The student loan interest tax deduction helps a bit. Not huge, but fine.
- Markets swing. If a red day makes you panic, keep more cash. That’s okay.
A quick gut-check
If you’re still figuring out whether your own loan total is manageable or already tipping into the danger zone, you might find this guide on how much student debt is too much helpful as a reality check. Bankrate also breaks down the key numbers that can help you decide whether to focus on paying off student loans or investing.
- Is your rate above 6%? Consider paying it down faster.
- Do you get a 401(k) match? Grab it before extra debt payments.
- Going for PSLF or another program? Minimum payments plus investing can be smart.
- Need sleep more than speed? Pay the loan that bugs you the most. Money is math. But also feelings.
My bottom line
I love being debt-free. I also love watching my accounts grow. That sounds like a fight, but it isn’t. Here’s how I blend it now:
- I always take the match.
- I build a basic buffer.
- I crush the high-rate stuff.
- I invest while I finish the low-rate pieces.
It’s simple. It’s human. And it worked for me.
If you want numbers for your case, write down: loan rates, minimums, your match, and what you can save each month. Then test two paths on paper. Which one lets you breathe and stick with it for a full year? That’s your answer.
I’m cheering for you. And hey, if you make your payment today, treat yourself to something tiny. You earned it.