A Doctor’s Dilemma: Pay Off Student Loans Early or Invest?

As a physician, you've spent years investing in your education and training. Now, you're finally earning a strong income, but you’re also likely facing substantial student loan debt. A common question we hear from early-career physicians in this position is: 

“Should I pay off my student loans early or invest my excess income?” 

There’s no one-size-fits-all answer, but there is a strategic way to approach this decision, one that balances your financial well-being today with your long-term wealth-building goals. The key is to look at your debt in context, consider your personal values, and build a plan that supports your bigger picture. 

Step 1: Understand the Real Cost of Your Loans 

Start by examining the interest rates on your student loans. Federal loans often have relatively low interest rates, especially if you’re on an income-driven repayment plan. On the other hand, private loans can carry much higher rates. Understanding the cost of your debt is foundational to making a smart decision. 

Ask yourself: What is the average interest rate across my loans? Are any of my loans eligible for forgiveness (e.g., through Public Service Loan Forgiveness)? Am I receiving any tax benefits from the interest payments? 

If your loans carry rates below 4–5%, and you're not in an aggressive payoff or forgiveness strategy, it may make financial sense to invest excess income rather than pay off early. That’s because historically, long-term investment returns, especially in diversified portfolios, often outperform the cost of low-interest debt. In short, your money may work harder for you in the market than it would by shrinking your loan balance. 

Step 2: Consider Your Emotional Risk Tolerance 

As with any decision, there are qualitative components to go along with the quantitative, and sometimes these can live at a disconnect with one another. Even when the numbers point to one strategy, your comfort level with debt and risk may tell a different story. Some physicians are deeply uncomfortable carrying debt, even if the numbers suggest it’s better to keep investing. Others feel more peace of mind knowing their money is working for them in the markets. 

As you’re reflecting on the decision, consider: Would I feel more in control with less debt? Or do I feel more empowered seeing my investments grow over time? 

There’s real value in emotional clarity. The best strategy is often the one you can stick with through market cycles and career changes. Consistency is often more important than perfection. 

Step 3: Build a Financial Safety Net 

Before tackling debt or maxing out investment accounts, make sure your financial foundation is secure. Just like in medicine, you may need to triage the patient (your financial life) before moving to long-term treatment (debt or investing strategies). Your financial foundation should include: 

• A cash reserve of 3–6 months' expenses 
• Disability and life insurance coverage appropriate for your income and family obligations 
• A basic estate plan (yes, even early in your career) 

With these pieces in place, you’re better equipped to make higher-level financial decisions without taking on unnecessary risk. 

Step 4: Run the Scenarios 

Let’s look at a simple example. Imagine you have $150,000 in student loans at 4% interest and an extra $2,000/month available after living expenses. You could: 

• Pay down your loans aggressively, eliminating the debt in ~6.5 years and saving on interest payments 
• Invest that $2,000/month, and with a 7% annual return, potentially growing your portfolio to ~$190,000 over that same time 

A third option? Split the difference. By applying $1,000 to your loans and investing the other $1,000, you reduce your debt, build your net worth, and maintain flexibility for the future. This blended approach often works well for physicians who want the best of both worlds—progress on debt and investment growth. 

Step 5: Align With Your Career Goals 

Your financial strategy should align with your professional trajectory. The nature of your career plans may shift the calculus on whether to prioritize loan repayment or investment. 

Are you planning to stay in a non-profit or academic setting? You may qualify for loan forgiveness, and investing could be the better use of capital. Or do you rather foresee yourself building a private practice or moving into higher-earning roles? Aggressive debt payoff may give you more financial freedom to invest in your career or business. 

Understanding where your career is headed and the income and flexibility it may bring can help inform the right financial moves today. 

Final Thought: This Isn’t a Binary Choice 

The best strategy often isn’t "either/or," but rather a thoughtful blend of options. Every physician’s financial situation is different—your plan should reflect your goals, obligations, and mindset. 

Working with an advisor who understands the financial pressures and opportunities in the medical profession can help you make decisions with clarity and confidence—not just for today, but for your future wealth, lifestyle, and peace of mind. If you have questions or want to discuss your specific financial situation, I encourage you to reach out to a Curi Capital advisor today.