Is it Better to use Excess Cash to Pay Down Student Debt or to Invest it?

During this time of greater-than-average rates of student loan forgiveness, many investors may question whether it is better to use excess cash to pay down student debt or to invest in the stock market. After creating an emergency fund, which should typically be sufficient to cover approximately three to six months’ worth of living expenses, and maximizing any available tax-advantaged investments, it is important to consider the type of student debt, the amount of interest being charged on the debt, and any refinancing options. While there is no one solution for every investor, a key factor to consider is whether the interest rate charged on the loan is greater or less than the gains that could be made on a risk-adjusted basis, at a tolerable level of risk, by investing in the stock market.

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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management