Broke Millennial’s Guide to Investing If You Have Student Loans

Should you pay off your loans faster or start putting money in the market?

Illustration: Bull’s Eye/Getty Images

Whether to invest while you’re paying off student loans is a fiercely debated topic in the personal finance world. It’s about half a step below the “should you be allowed to splurge on nonessentials when you have debt” debate. (I vote yes, with moderation.)

Truthfully, the answer is simple: Yes, you should be investing when you have student loans.

Now, buckle up for some actual number crunching. It’s the only way to make a compelling case for why it’s in your best interest to start investing before paying off student loans.

Credit card debt vs. student loan debt

There’s a significant difference between investing when you’re carrying student loan debt and investing when you have credit card debt, also referred to as consumer debt. Your credit card debts probably carry annual percentage rates (or APRs) of 15% to 30%. You’re unlikely to see average returns like that on all your investments from the market in a year and certainly not on average over a longer period of time. Therefore, it doesn’t make sense to focus on investing when you have a debt accruing 15% to 30% in interest, because…