How to Build Wealth While Paying Off Six Figures of Student Debt

The conventional wisdom goes like this: pay off your debt first, then start building wealth.

It sounds logical. It feels responsible. And Dave Ramsey said to! But for most people carrying student loans, it's the wrong approach.

If you're a BigLaw associate earning $225,000 or more with $150,000 in law school debt, treating your loans as the only financial priority is costing you. Not just in opportunity cost, but in real dollars that compound over decades.

The goal isn't to choose between paying off debt and building wealth. The goal is to do both strategically at the same time.

Here's how.

First, Understand What Your Debt Actually Costs

Not all student debt is created equal. The interest rate on your loans determines everything about how aggressively you should be paying them down.

Federal loans for graduate students currently carry rates in the 7% to 8% range. Private loans vary widely. Before you build any strategy around your debt, you need to know exactly what you're carrying, what rate it's at, and whether it's federal or private.

That distinction matters more than most people realize because it will determine what options you have moving forward.

The Federal Loan Decision: Refinance or Don't

If your loans are federal, the first major decision is whether to refinance into a private loan to capture a lower interest rate.

On the surface, refinancing looks attractive. Lower rate, lower monthly payment, less interest over time. But refinancing federal loans into private loans permanently eliminates your access to income-driven repayment plans and Public Service Loan Forgiveness.

For BigLaw associates at large private firms, PSLF is off the table anyway. But income-driven repayment plans can still be a strategic tool depending on your cash flow situation, your career trajectory, and your other financial priorities.

Refinancing is not automatically the right move. It depends on your full picture.

The Repayment vs. Investment Math

Here is where most high earners get it wrong.

If your federal loans are at 7% and you can reasonably expect your investment portfolio to generate 8% to 10% returns on average over a long time horizon, the mathematical argument for aggressive loan paydown weakens considerably.

Paying down a 7% loan is a guaranteed 7% return. Investing in a diversified portfolio has historically outperformed that over long periods, though with no guarantees.

This is not an argument to ignore your loans. It is an argument to be intentional about where every dollar goes rather than throwing everything at your debt and hoping the rest works itself out.

The Parallel Strategy

For most BigLaw associates, the right approach looks something like this: Make your required loan payments every month without fail. If you have private loans at high interest rates, consider paying those down aggressively before anything else. Federal loans at moderate rates deserve a more nuanced approach.

At the same time, work to max your 401k. The pre-tax contribution reduces your taxable income immediately, which matters enormously at your income level. A $24,500 contribution to your 401k saves you somewhere between $8,000 and $10,000 in federal taxes depending on your bracket. That is not money you want to leave on the table while you pay down 7% debt.

Consider a backdoor Roth contribution annually. At $7,500 per year, this builds a tax-free growth vehicle that your future self will thank you for. The dollar amount is small relative to your income, but the long-term impact is not.

Once those boxes are checked, look at your cash flow and make a deliberate decision about how to split additional dollars between loan paydown and a taxable brokerage account. There is no universal right answer. It depends on your rates, your timeline, your risk tolerance, and your goals.

The Income-Driven Repayment Angle

If you are carrying a significant federal loan balance and are earlier in your career, income-driven repayment plans deserve a serious look before you commit to aggressive paydown.

Plans like SAVE, IBR, or PAYE cap your monthly payment at a percentage of your discretionary income and offer forgiveness on any remaining balance after 20 or 25 years. For associates with very large balances relative to their income in the early years, these plans can free up significant cash flow for investing.

The tradeoff is that forgiven balances under income-driven repayment are currently treated as taxable income in the year of forgiveness. The strategy requires careful modeling to determine whether it makes sense for your specific situation.

This is not a decision to make based on a Reddit thread. It requires running the actual numbers.

The Bonus Is Your Accelerator

One of the structural advantages of BigLaw compensation is the year-end bonus. For associates who have their baseline savings and investment strategy locked in, the bonus becomes a powerful tool for accelerating loan paydown without sacrificing wealth building during the year.

The move is straightforward. Cover your lifestyle and savings commitments from your base salary. When the bonus arrives, consider deploying some toward your highest-interest debt. The rest goes into your taxable brokerage or toward other financial goals.

This approach lets you build wealth consistently throughout the year while using a concentrated annual payment to chip away at the loan balance faster than a monthly payment plan alone would allow.

What Most Associates Get Wrong

The biggest mistake is paralysis. Carrying six figures of student debt feels overwhelming, and that feeling leads a lot of high earners to either ignore their finances entirely or become so fixated on the debt that they miss a decade of compounding in the market.

Both outcomes are costly.

You do not have to choose between being debt-free and being wealthy. You have to build a system that moves both forward at the same time, with intention and consistency.

Your income gives you the ability to do this. The question is whether you have a plan that actually takes advantage of it.

If you're carrying six figures in student debt and you're not sure your current approach is the right one, let's look at it together.

Colby Long is a Wealth Advisor at EPM Financial specializing in financial planning, tax strategy, and student loan optimization for corporate attorneys and high-earning professionals.