Why It’s Dumb To Pay Off Student Loan Debt Before Investing In Real Estate

Sterling White
4 min readJan 2, 2017

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It’s been taught to go to college, so then you can find a good job, accumulate debt, and spend the rest of your life paying it off. For some industries, higher education is a necessity. Let’s face it. No one wants to meet their surgeon and realize that he learned his trade on YouTube, but for many careers, college is an unproductive learning environment. Higher education will always have its place, but the downside is that many individuals graduate with mountains and mountains of student loans. One of those individuals may be you!

You might be facing student loans and little job options. Everyone is looking for “experience.” Wages are stagnant and options are limited. There is no choice, but to make a decision on where to spend your money. That can be tough in itself. For those wondering if it’s better to pay off your student debt or put your money into real estate investments, here are some insights that I’ve discovered from personal experience.

My Story — How I Became An Investor

The choice that I made was to leave college and start investing. I chose to put my money into real estate and pay off my student loans later. If I could go back and do it over, I would make the same decision. The strategy of investing in real estate and paying off my student loans later worked for me. I know that it has been a successful choice for others as well.

The Other-Side

There are those who choose the opposite approach, making payments on student loans first. They are STILL making payments on those loans, not making any money, and struggling financially. Their quality of life is not what they dreamed it would be.

Personally, I believe that it is a detrimental decision to choose to pay off student debt first. Why would you place your money where it has no chance of returning to you in a greater amount? If you put your money into the real estate market as an investor, you could be making capital, creating income to live off of, and revenue that will help decrease your student loan amounts. This is what I am now doing with the profits I have gained in the industry. If I started paying loans first, then I would have had the initial capital to get started in my venture.

Your Responsibility

I’m not suggesting that you don’t pay off your student loans. Obviously, you have an obligation to fulfill the agreements you made. That is not a question, but there are big advantages to placing your money into investments first. The most apparent reason to invest first versus paying off student debt is the discounts that will be offered to you on a property. The values of real estate have continued to rise steadily over time. This has been the case since the beginning of recorded history. 99 percent of the population will not be able to save enough in the bank to keep up with inflation. Therefore, investing early is not a luxury, but a necessity. If you don’t, owning a home or a rental property will continue to move further and further beyond your reach.

Where Will You Find The Best Returns?

It is possible to defer student loan payments. Deferring loans is an excellent way to stretch your money longer by waiting until you have an active and consistent income. It’s a very good idea to take advantage by investing, and in turn, this will create a surplus of revenue that you can put towards decreasing your loan payments later.

The Test

Put your real estate investment and your student loans to the test — a test that determine what will give you the best returns. If your student loan payments are at 5 percent interest, but you predict (and can reasonably expect) that you will score 8 to 10 percent return on your real estate investment, invest first. You then have the option to pay back the loans and pocket the change.

Also consider that if you dump everything that you have into your debt payments, what does that leave you with in the end? Nada. Zilch. Nothing. By investing first, you have the chance to pay off your loans and may end up with a valuable asset and ongoing passive income for life.

The question is — what will you do?

“Do something today your future self will love you for” -Sterling White

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