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If your student loans are compounding at ~2-3% variable, does it make sense to pay them off or just save for a house down payment for the distant future? 22 years old here.

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Don’t pay them off aggressively. Instead, take any surplus money you would use to pay off your student loans and invest it in the market. You’ll get a better return on your money.

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That’s actually true ^ my student loan balance is worth less and less as time moves on

From a math standpoint, consider how much money you may save from purchasing a house vs renting. If that savings is greater than 2-3% purchasing makes sense.

From a non-math standpoint, if owning a home is an important goal to you just go for it. 2-3% interest is pretty negligible in the grand scheme of things.

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Aggressively pay them off. Your credit score will be much better which will allow you to get much better mortgage rates.

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D1 this is incorrect.

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If you aren't going to aggressively pay them off get a fixed rate loan.

smart

You’ll likely be over leveraged if you buy a house and have student loans.

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House hack instead. But a multi unit, pay minimum on student loans, rental from other units pays your rent. Your salary can now destroy your student loans.

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Both makes sense. It’s just what you prefer.

That's basically free money. Save for a house.

Isn't there an annual $2500 federal tax deduction covering the interest from student loan?

Not exactly. It's only a deduction at $2500 if you're at/below 60k income and actually paid 2500 in interest.

It gets phased out by income and based on what you actually paid in interest - if you make 60k but paid less than 2500 in interest you can only deduct what you paid. If you make more than 60k but less than 80k the deduction is less than 2500, even if you paid 2500. Similarly if you make 60k and paid more than 2500 in interest it's capped at 2500. Between 60k to 80k income and more than 2500 in interest reduces deduction based on 2500 max.

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