Pay off state-sponsored student loan vs. save or invest

[JumpToTheMoon]

I am a single first year medical resident spending a year living with my parents before moving elsewhere for my PGY-2 to begin my radiology residency. I will have some excess cash this year. I have an outstanding loan from my undergraduate education for about ~14k. It's not a Federal loan (I have plenty of those and am planning on REPAYE during residency and then PSLF or refinance, depending on my work situation after residency, as recommended by this site) but instead is administered by a state Office of Higher Education. It has a 3.4% variable interest rate but no deferment, forbearance, or loan forgiveness options available, and my parent is a co-signer.  My initial plan was to pay off this loan this year to avoid having a monthly payment to make when I move in June 2017 and have rent and other expenses I'm saving on this year living at home.  Additionally, since my parent is a co-signer and I'm living at home this year, paying off the loan would be a way to "pay rent" to my parents as a thank you  However, I have read some columns that recommend saving or investing as opposed to paying off such a low-interest loan aggressively. What are your thoughts?

[jfoxcpacfp]

JumpToTheMoon wrote:

Additionally, since my parent is a co-signer and I’m living at home this year, paying off the loan would be a way to “pay rent” to my parents as a thank you  However, I have read some columns that recommend saving or investing as opposed to paying off such a low-interest loan aggressively. What are your thoughts?

Click to expand...

I agree - given that your parent is a co-signer and your parents have graciously allowed you to live at home this year, pay it off.

[The White Coat Investor]

Not enough info to give good advice. Certainly paying off this loan is a good thing to do. Whether it is the BEST thing to do or not is another matter. It could easily be argued that maxing out a Roth IRA and a Roth 403b invested aggressively in index funds would be a BETTER thing to do, but no guarantee there.

Certainly you will be paying off the loan eventually.

Certainly it is good to pay off loans where parents are co-signers earlier rather than later.

Certainly it is good to pay off variable loans if interest rates go up rapidly.

This post may help:

https://www.whitecoatinvestor.com/student-loans-vs-investing/

[JumpToTheMoon]

The White Coat Investor wrote:

Not enough info to give good advice. Certainly paying off this loan is a good thing to do. Whether it is the BEST thing to do or not is another matter. It could easily be argued that maxing out a Roth IRA and a Roth 403b invested aggressively in index funds would be a BETTER thing to do, but no guarantee there.

Certainly you will be paying off the loan eventually.

Certainly it is good to pay off loans where parents are co-signers earlier rather than later.

Certainly it is good to pay off variable loans if interest rates go up rapidly.

This post may help:

https://www.whitecoatinvestor.com/student-loans-vs-investing/

Click to expand...

Thanks for the reply.  Any other info I could provide that would help you be more specific?

[The White Coat Investor]

JumpToTheMoon wrote:

The White Coat Investor wrote:

Not enough info to give good advice. Certainly paying off this loan is a good thing to do. Whether it is the BEST thing to do or not is another matter. It could easily be argued that maxing out a Roth IRA and a Roth 403b invested aggressively in index funds would be a BETTER thing to do, but no guarantee there.

Certainly you will be paying off the loan eventually.

Certainly it is good to pay off loans where parents are co-signers earlier rather than later.

Certainly it is good to pay off variable loans if interest rates go up rapidly.

This post may help:

https://www.whitecoatinvestor.com/student-loans-vs-investing/

Click to expand…

Thanks for the reply.  Any other info I could provide that would help you be more specific?

Click to expand...

Yes. Take a look at that link. For instance, what is your comfort with debt? Are you already maxing out all available retirement accounts? What are the terms and our other debts? Do you plan to buy a house soon? Is there a match available from an employer? etc. There can be a lot to it. I'd read that post and think about your situation, realize that you're choosing between good and maybe a little bit better, and do what seems right to you.

[JumpToTheMoon]

Thanks!  It appears I'd be remiss if I did not start my Roth IRA this year.  I should have room to do that and pay off a considerable portion of that loan.