🤔 Student Loans vs Investing
You have a bit of extra money each month. Should you throw it at your loans or invest it? Real math, real projections. Let's see which path builds more wealth.
Your Numbers
$
$
$
Loan Payoff Scenarios
Minimum Payments Only
12.1 years
Interest paid: $15,547
With +$300/mo Extra
5.3 years
Interest paid: $6,493
Paying extra saves you $9,054 in interest and pays off 6.8 years earlier
Wealth Comparison
Scenario A: Pay extra on loans → invest everything after payoff
Scenario B: Pay minimum on loans → invest the extra monthly now
After 10 Years
A: Pay loans first, then invest$42,903
B: Invest now, pay minimums$51,925
🏆 Investing now wins by $9,023 after 10 years
After 20 Years
A: Pay loans first, then invest$198,725
B: Invest now, pay minimums$156,278
🏆 Paying loans first wins by $42,447 after 20 years
💡 Rule of thumb: If your loan rate > investment return rate (7%), pay loans first. If your loan rate < 7%, investing likely wins. Your loan rate is 6.5% vs 7% expected returns. Investing looks better long-term.
FAQs
Should I pay loans or invest?
If your loan rate is below ~7%, investing likely wins long-term. Above that, pay loans first. When rates are equal, do both.
What about compound interest?
Compound interest makes early investing incredibly powerful. Even small amounts invested early grow dramatically over 20–40 years. Time in market > timing the market.
Should I get my 401k match first?
YES. A 50% employer match is an instant 50% return — better than any loan payoff math. Always get the full match before doing anything else.
What return rate should I use?
The S&P 500 has averaged ~10%/year historically, or ~7% after inflation. 6–8% is a reasonable conservative assumption for diversified stock investing.
Sources: Federal Student Aid Interest Rates, IRS Topic 456 (Student Loan Interest), BLS Education & Employment. Last updated March 2026.