Paying Off Student Loans With Passive Income

As physicians, we’ve all felt the crushing weight of the almighty student loan. Some have felt it more than others, perhaps, but a vast majority of medical school graduates wonder if they’ll ever pay their loans off.

In fact, according to the AAMC, the average medical student leaves school with about $190,000 in student loan debt. That can be a very intimidating number.

After a few years out in the real world, and after buying my house, I found myself in a pretty comfortable situation. I had saved enough money to actually pay my student loans off completely. But did I do that? Nope.

Paying Off Student Loans With Passive Income

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See, in my mind, all debt isn’t necessarily all bad. Debt for an education is usually good debt. Taking out a loan for a fancy car and struggling to make payments each month is bad debt. 

Not All Debt is Bad

So, instead of paying off my student loans all at once, I decided to take that money and buy a rental property. So as a result, the cash flow from my rental is covering my entire student loan payment every single month.

My $85,000 loan will be paid entirely by a $35,000 investment in a home.  Eventually, that $35,000 will be worth at the very least  $105,000, plus any appreciation that will have taken place and minus any large repair expenses.

So, What’s the End Result?

With all that said, I certainly can’t fault anyone for choosing to pay off their debt all at once. There is value to the peace of mind that comes from knowing you are debt-free.

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