I will be getting nearly $165,000 in child support arrests from my former husband. I have two kids in college. (Dad doesn’t contribute.)
We’ve taken out private student loans to pay for their college tuition. Should I pay toward the loans, or should I invest in something yielding a higher interest rate than their loan interest? I am currently paying all the interest, so as not to compound their loan amounts. I do intend to use part of a yearly bonus to pay off some of the loans as well.
Sure, it’s possible to get returns that are higher than the interest you’re paying. In an average year, an S&P 500 index fund produces returns of about 10%, which is probably a lot more than the interest rates on your loans. Of course, you could also lose money, as we’re all painfully aware of in the abysmal stock market year of 2022.
Meanwhile, paying down your kids’ student loans presents a guaranteed return in terms of the money you’ll save on interest. But the biggest rewards aren’t quantifiable.
Think about the enormous burden you’ll be lifting off your kids’ shoulders if they can start their careers owed a combined $165,000 less. Think of how much less stressful living on an entry-level paycheck will be. Think of the dreams they won’t have to delay because you’ve made their debt more manageable.
But this isn’t just about your children. Since it sounds like your name is on