[USER]

I’m 19 and in my second year of college. I drive a very old car that might need replacement in the near future. I will finish my four-year degree with approximately $25,000 in student loans.

I inherited $30,000 and need guidance on the best possible approach to utilize my inheritance.

Thank you. I look forward to your knowledge, guidance, and advice.

[Anthony]

Pay off any debt and then open and contribute to a Roth IRA

[Jason]

I would first open a ROTH IRA and start contributing the annual maximum ($7K for 2025) to it and investing while SIMULTANEOUSLY paying off your debt.

If it were consumer debt with high interest I’d prioritize paying off the debt first, but since these are student loans with low/little interest and no time limit to pay them off, I wouldn’t DELAY getting into the market anymore as the advantage of it is being in it for a long time.

[Jay]

It depends when you finish your 4 year and obtain your degree. If you’re in school they won’t make you pay off that loan yet. Also, after you finish they might give you 6 months to a year.

I would put $5000 of that in a Roth ira to start your retirement. Then put $20000 in a high yield savings/CD until you finish school.

Lastly, put the remaining $5000 in a Emergency savings.

That savings can be for a down payment on your nxt car or it can pay the bills.

Once you finish school you’ll be making big bucks!

Good luck!

[Aaron]

It hurts my brain seeing all the mindless “pay off the debt” responses without knowing the terms.

[Bailey]

What is your interest rate on your loans? If it’s lower it would be idea to get a good used car instead of going into debit for a car with a higher interest rate than your student loans

[Kris]

Put it all in the s and p 500…forget that it was yours for the next 30 years. Enjoy retirement

[Emily]

You didn’t ask about this in particular, but one of the absolute best things you can do for your financial future is get an internship related to your major or career interest this summer and again your junior year.

I worked as a career counselor at Stanford and the difference in job offers and salaries for students who took advantage of their summers was astounding!

Having solid career prospects makes it a lot easier to feel confident about paying off loans, getting a functioning car etc.

[Jules]

Are your loans accumulating interest while in school? If not put that money in an HYSA or CD with plans to pay it off when you get out.

But if you need a car before you get out and have a full time income you will have enough to buy a used one that will last a while.

Plus, first last and security, basic furniture, things you will NEED to get started out of school before the money starts rolling in.

[Joe]

Pay off the 25,000 ASAP.
*yes, it depends on the terms, chances are good the terms are a liability and thus debt will snowball out of control.

This is my own opinion not one spoon fed to me.

If you care to articulate your opposition to it do so and I will listen. Otherwise PO

[Stefanie]

Do not pay the debt until you determine your future employment and whether it will pay off school debt as a benefit

Put $5000 in a HYSA and the rest in the S&P & vtsax and pretend like it never existed.

Also try and work for the college to cut costs and absolutely do an internship as someone else recommended

[Heidi]

If interest is not accruing on your loan, wait until you have to start repayment to pay it off! In the meantime put 20k into a HYSA (so you can earn a bit until it is time to repay loan), 5k into emergency/car fund HYSA and the other 5k into an index fund for retirement. You may also end up in a job/career that may cover your loans.

[Ryan]

Depends on the interest rate for your loan and when you’re expected to start repayment. If the clock is ticking now, while you’re still in school, absolutely start paying it off.

If you don’t have to start paying until after you graduate and the rate isn’t terrible, I think you would do better to put that money to work for you, at the very least in a HYSA.

This will about you to make more money than if you put it in a traditional savings account or, worse, held it in cash.

An added benefit is that you can access it fairly quick if you have an emergency (like your car dying and you needing to get a new one). Good luck

[Gretchen]

Pay the loans. Don’t buy the car unless you absolutely have to, and then spend less than 10K (put that extra 5K towards the car to minimize your debt)

[Bryon]

I would keep the money in a high yield saving account and plan to pay off the loans following college.

You don’t want the loans and interest hanging over your head for years to come.

[Tomeeka]

Put some $$ towards Roth IRA/HYSA…if you understand stocks, put a bit there…focus on your unsubsidized loans that are accuring interest.

Look for a pd internship that you can use to save separately towards a car: try not to by brand new.

Look into becoming a RA so that you can get free housing & maybe meal plan to cut dwn on future loans.

[Robert]

Contrarian here-
I have never been a good saver so make your own decision.
I have around 20k in student loans (5-7%) though they were deferred during COVID. Not sure what rates are now.

That being said- my annual is around 500-600k/yr between rentals, flips, and 1099 income. Around 3M net worth with 20 rentals and personal.

I can pay off my loans in a pinch, but leave it because my capital makes more money elsewhere. Aka, if I have 50k, I can easily triple it within one year.

Now that I have qualified my response, I would recommend to keep the 30k and invest in your first business, wait until your beater stops working, then finance a used Honda or Toyota with at least 100k miles, and keep your student loan debt (I usually throw an extra 5k/yr but do whatever you want).

Student loan debt servicers will give you months of no payment with hardship.

Just my 2 cents. Best of luck regardless.

PS my current car is a 2013 Accord with 285k miles. I bought it new though because of the Mrs.

[Thomas]

The sheer amount of Ramsey robots telling you to pay off the student loans ASAP is mindboggling.

DON’T do that. Trust the advice of folks who are telling you to setup an emergency fund in a high-yield savings account + start investing in a Roth IRA.

You’ll learn a life lesson around conducting arbitrage.

Assuming your student loans don’t accrue interest until shortly after you graduate, you’re making money from the savings account while having no growing borrowing costs.

Debt is a tool and can be used to your advantage if you use it right. Make sure you don’t take on debt to make any splurges.

As you get closer to graduation, assess all your debts (terms, interest, etc.) and your salary potential (kudos to the comments here recommending you take on internships and get a better sense of your career path).

I wouldn’t start deploying any capital towards student loans unless you have a solid emergency fund of at least 6-12 months living expenses.

That emergency fund can be used to put a down payment on a car.

Or if your student loans have a lower interest rate than your auto loan, then try to buy the car using cash and pay the student loans off more slowly.

[Tran]

Kudos for you to ask such questions. Kids nowadays care what they want more than what they need.

I would pay off my debt and buy a used car to save money.

[Mike]

Since you are in college no need to repay the loans yet. Put $5k in a savings account for car repairs. You likely wont need another car until you are of school and working and possibly not even then.

Put at least $1K in a Roth IRA and invest it in a low cost total market index fund or a S&P fund (use the etf version so you don’t need to worry about minimum amounts).

Don’t take anymore loans and use the rest to work your way through college.

[Mark]

Pay of debt. Open roth irA and depost 5k. Invest in a broadbased, low.cost index fund or etf of ur choice..keeping ur loan around like a pet isn’t wise.

Sooner it’s gone. The better

[Rob]

Are you working as well? Would your parents be able to co-sign on an FHA loan for a house hack?

Depending on your location this could bring your biggest monthly expense to $0 or close to it

[Author]

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