<prompt> Human: Ive been doing a PhD in Europe for a few years now and found its possible to save up some money, as the tuition is basically free and my funding is pretty good. I have about 43k in student loans which is interest free while Im still a student but will be 5.5 when Im finished in about a year and I should have saved about 30k by that time. Ive been reading about index fund investing and it seems that I can get a signicicantly better return than 5.5 over the long term. So Im wondering does it make sense to just invest most of my money to index funds or to first get rid of my student loan debt? EDIT: Thanks everyone, seems the overwhelming consensus is to pay off student loans first, which is what I was leaning towards doing. The extra 1-2 I could gain isnt worth the risk or stress of having the loan. It will definitely feel good to have it paid off within a year or two as well!  <response>: I am a no debt kind of guy so I recommend attacking the debt and paying that off. THEN, with no debt, you can save even larger amounts of money.Now the discussion of return is often raised just like you did but when people look at debt mathematically they sometimes believe holding debt at a lower rate and investing at a higher rate is better. And, all other things being equal, it is. BUT what is missed is the risk portion. The easy way to bring the risk portion into the equation is to reverse the scenario and ask yourself if you WERE debt free would you borrow money at 5.5 to invest hoping to get a larger return? Most who have some risk averse to debt would say no so the opposite should also be true. If IN debt it is better to pay off the debt first THEN work on investing.Thats my take: 