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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76074  
Subject: Re: Roth or School Loan? Date: 1/26/2004 5:57 PM
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My only debt right now is 16,000 in college loans. My question is this. After I condolidate my loans my interest rate will be 2.3% and my payments will be about 100 a month. I feel as though I should only put the minimum 100 in each month expecting to recieve a higher rate of return on my investments. I predominantly invest in two Vanguard funds (The total market and Reit funds.) Does this logic make sense? I know from reading over the boards that several fools encourage paying off debt as soon as possible, but with such a low interest rate I feel as though I should just let it ride out. Any ideas would be greatly appreciated.

I am doing that exact thing right now. My student loans are close to that percentage and I have opted to pay that debt off over the full term of the loan. However, I am a little further along in the process as I began repayment in 1997.

With an interest rate so low, I think it is wise to maximize the potential of your money. As long as you do not feel uncomfortable carrying the student debt, I see no reason why you should not continue as you are planning. Some people are not comfortable with that debt lingering around and prefer to pay it off as soon as possible.

Are you also saving for an eFund? An eFund (emergency fund) is intended to cover any of life's unexpected emergencies and prevent the need for using credit. If you are not funding an eFund, that would be my first suggestion.

dt
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