Student Loan Payoff vs. Invest Calculator

It’s an age-old question: Should you pay off your student loans or invest? The simplest answer is if your student loan debt has a higher interest rate than your expected return on investment, pay down your student loans first. If your investment earns a higher rate than your student loans will cost in interest, invest.

Many other variables, such as tax deductions and employer investment matching programs play into this equation. Use the Student Loan Payoff or Invest Calculator below to determine your repayment strategy.

Total interest (192mo)$64,682$97,578
Loan payback time192mo273mo

Investment - Loan Balance: –$4,840

In your case it is wiser to prepay than to invest.

Total interest

Loan payback time






Assumptions: This estimation assumes you will pay a fixed amount every month to either your loan prepayment or to some type of after-tax or tax deferred investment. If it is after-tax it will be more available to you, but every 12 months you will be forced to pay tax on your annual yield. This also assumes that you take the extra tax savings by NOT prepaying (prepaying lowers your deductible interest payments) and you put the tax savings into the investment as well. This also assumes that the top income tax rate will stay the same for a long time. This tax rate should also include your state income tax too if applicable.

Student Loan Payoff vs. Invest Calculator FAQs

1. Should I take the calculations from the Student Loan Payoff vs. Invest Calculator and apply them directly to my financial situation?

No. The calculations here are for estimation purposes only. It’s important to note that this calculator in particular also factors in a lot of assumptions that may not hold true, such as annual expected return on investments as well as long-term tax rates. Additionally, there are other factors that this calculator cannot account for. As always, we recommend consulting a finance or tax professional when it comes to making your own financial decisions.

2. What value do I use for the “Extra Money Payment Amount” field?

This calculator assumes that you have extra money left over each month after you pay your monthly student loan bill. Enter the amount you have left over in the “Extra Money Payment Amount,” field. The calculator will then calculate where it may be best for you to apply this money (towards your student loans or an investment account).

If you do not have any money left over in your budget after paying your student loans, this calculator will not be helpful to you.

3. How do I make extra payments on my student loans and make sure the payments are applied correctly?

Check out this blog post to find out.

4. If I want to invest my money, how and where can I do that?

You can check out various investment options with our partners in the Student Loan Hero Marketplace.


  1. Prepaying student loans may be better than investing.
  2. Investing may be better than prepaying student loans.

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