Should I Pay Off Medical Student Loans or Invest?
By Jared Andreoli, CFP®, CSLP®
You’ve finally made it—after years of intense study, long shifts, and modest pay, you're now earning a real attending-level salary. But with this new financial freedom comes a big question: Should you use your extra income to pay off medical student loans, or should you start investing for your future?
If you’re like most physicians, the weight of six-figure student debt is still hanging over your head. And while investing might feel like the smarter long-term move, paying down debt can offer immediate peace of mind.
So what’s the right choice? Like most financial decisions, the answer isn’t one-size-fits-all. In this article, we’ll walk you through how to evaluate your financial foundation, assess the true cost of your loans, and strike the right balance between student loan repayment and investing.
Set Your Financial Foundation First
If your medical residency was like many others, you worked long hours for low pay. You may not have had the funds to build a financial safety net (or the mental energy to think about building one).
As an attending, you’re likely making multiples of what you earned as a resident. Before you rush to pay off medical student loans, take the time to build a basic financial safety net:
Save a cash reserve of three to six months of expenses.
Work with an estate planning attorney to create a simple estate plan.
Even a relatively simple plan like this can help shield you and your family from unexpected issues. With your plan in place, you can start thinking about whether to pay off your medical student loans early.
Take a Look at the Numbers
Mathematics isn’t the only thing you should take into account when deciding whether to pay your loans off early or invest your extra income. However, understanding the interest rates and true costs of your loans is a great place to start.
These are a few questions to ask yourself as you begin the process:
What’s the interest rate on each of my loans?
What’s the average interest across all of my medical student loans?
Am I eligible for any loan forgiveness programs (like Public Service Loan Forgiveness)?
Am I gaining any tax benefits from paying student loan interest?
If you’re eligible for loan forgiveness, this strategy should save you more over time than paying your loans off aggressively. If you don’t qualify for loan forgiveness and your medical student loans have fairly low interest rates (in the 4% to 5% range or lower), it might make more sense to invest.
Why? Broadly speaking, long-term investments in balanced, diversified portfolios typically earn more money than you lose paying interest.
Remember That You Don’t Have to Choose One or the Other
Some early-career doctors put 100% of their extra income toward early repayment of their medical student loans or investments. However, this doesn’t have to be an either-or choice.
If you can’t decide which option is better, there’s nothing wrong with splitting the difference and putting some of your excess income toward each one. You can always adjust your strategy later.
Looking for Help Managing Medical Student Loans?
The question of paying off medical student loans versus investing is just one of many you’ll face as a physician. Fortunately, you don’t have to make these critical decisions alone.
Simplicity Financial LLC is a fee-only financial planning firm focused on the needs of physicians with student loans. We know you’ve worked hard for your money, and we’re determined to make your money work for you. If you have questions, contact us online.
Get started by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
Frequently Asked Questions About Paying Off Medical Student Loans vs Investing
Is it better to pay off medical school debt or invest?
It depends on your financial goals, loan interest rates, and eligibility for loan forgiveness programs. If your loans have low interest rates and you're not eligible for forgiveness, investing may offer better long-term returns. However, paying off high-interest debt can provide peace and guaranteed savings.
How can I decide between investing and paying off my student loans?
Start by evaluating your loan interest rates, income, and financial goals. Build an emergency fund and secure adequate insurance coverage first. Then consider a hybrid strategy, allocating some funds to loan repayment and some to investments, to maintain flexibility and balance.
Do physicians qualify for student loan forgiveness?
Yes, many physicians qualify for programs like Public Service Loan Forgiveness (PSLF), especially if they work for nonprofit hospitals or government organizations. These programs can significantly reduce repayment amounts over time, making early payoff less financially advantageous.
About Jared
Jared Andreoli, CFP®, CSLP®, is president and financial planner at Simplicity Financial, a fee-only RIA dedicated to helping early-career physicians conceptualize their financial picture and achieve their financial goals. Jared specializes in devising individualized financial road maps for clients, and he loves nothing more than a full day meeting with clients who value his partnership to solve problems—big and small.
After college, Jared spent six years working as a mutual fund administrator for a large company. While he learned an immense amount about the financial world, he was missing the personal connection of working with individual clients. Combining his passion for finance and personal connection, he established Simplicity Financial in 2017.
Jared has a degree in finance with a concentration in financial planning from Western Kentucky University, along with the CERTIFIED FINANCIAL PLANNER®, CFP® and a Certified Student Loan Planner (CSLP®) certifications. Outside of work Jared enjoys cooking and traveling. He played baseball in college and still coaches occasionally. He and his wife recently welcomed a daughter, who occupies most of their time. To learn more about Jared, connect with him on LinkedIn.