Student debt has risen to unprecedented levels: American student borrowers owe $1.48 trillion, more than the total U.S. credit card debt. In 2015, according to, the average student loan debt at graduation, including both federal and private student loan debt, was:

• about $35,000 for bachelor’s degree recipients

• $51,000 for master’s degree recipients

• $71,000 for Ph.D. recipients

• $167,000 for law school graduates;

• and $207,000 for medical school graduates.

Many Bachelor’s degree recipients are on 10-year repayment plans. If you’re one of them, you’re probably paying $200-$300 a month in student loans. That’s your monthly debt obligation, which you must meet.

But after that, you face a quandary: Now that you have a job, what do you do with your extra cash? Do you splurge to establish your life after college; put your extra money toward paying off your debt faster; or save for retirement? What should your priorities be?

There are no simple answers when it comes to your personal finances, because you’re an individual. But there are some guidelines and questions you can ask yourself to help make this decision:

• Have you established an emergency fund?

• How much in interest are you paying on your student loan debt?

• How much are you likely to earn in the market, saving for retirement?

The single most important step you can take toward developing a healthy financial life is establishing an emergency fund of three-six months’ worth of expenses. This will keep you from the credit card debt that cripples many households.

For most people, after they have established their emergency funds, it makes the most sense to put extra cash toward saving for retirement, especially if their employers match contributions.

The reason is that most student loan debt is relatively low interest – perhaps 4-7 percent.

The benefit of saving for retirement now may outweigh the benefit of paying off that low-interest debt early. Every $100 a month you save – that’s the cost of a cup of coffee a day – will make a huge difference in 50 years. At a very conservative 4 percent average annual growth rate, the $100 a month you put aside now will reach nearly $200,000 by retirement. If your employer matches your contribution, the return on your retirement plan investment starts that much higher. Figure 4 percent plus your employer match of, say, 3 percent, for a 7 percent return. 

In addition, if you’re saving for retirement with an automated deduction, you’re likely to stick to the plan.

The biggest mistake you can make is not to invest in your future at all. You might feel a sense of relief after the rigors of your college years. But don’t let that feeling turn into a habit of spending-before-saving. The coffee you make and share with friends is just as good as Starbucks you buy on the way to work; the furniture you buy wisely at a thrift store instead of an urban shop can easily last as long, and a low-cost Airbnb can be more fun than a high-priced hotel.

A consultation with a CFP® professional now can help you set a budget, save for the future and develop the habits that will keep your finances healthy.