I'm about to graduate college and enter a very well-paid job in an inexpensive area. I am confident that I could repay my student loans much sooner than ten years, but I am wondering whether this is the right approach because there are a number of opportunity costs.
To take one example, the interest rate on even my most expensive student loan, the Parent PLUS loan, is 6.4%. Historically, the long-term return on the stock market is about 7%, and funds with low expense ratios can realize virtually all of that increase. I could do a half a percent better (on average), than paying early on even my worst loan, if I invested in the stock market instead of in early repayment. That's a 13% additional return over 25 years. Buying a house may well be even better. I plan to invest for the long term and build my emergency fund with my interest payments in mind, so the added risk seems acceptable to me.
Is there any reason I shouldn't opt for the longest, most graduated payment plan I am offered?