If you have a 6% student loan and a 10% student loan, and can invest at 5% without risk, in what order should you allocate funds?
A) Start investing; the sooner the better
B) Split your excess cash flow between paying off the 10% loan and investing
C) Pay off the 10% loan, then pay off the 6% loan, then invest
D) Not enough information

Question

Quizplus · Accepted Answer

Paying off the 10% loan first minimizes interest expenses because it has the highest rate, followed by the 6% loan. Investing at 5% yields less than the cost of either loan, making it the last priority.

If You Have a 6% Student Loan and a 10