Student Loan vs Investment Decision Tool

Make informed financial decisions about your student loans and investments

This comprehensive tool analyzes your financial situation to help you decide whether to pay off student loans early or invest your extra money for potentially higher returns.

Financial Assessment Questionnaire

Loan Details

Total Student Loan Amount ($) ⓘ

Average Interest Rate (%) ⓘ

Current Monthly Payment ($) ⓘ

Extra Money Available per Month ($) ⓘ

Personal Finance

Annual Income ($) ⓘ

Emergency Fund Status ⓘ

Yes, I have adequate emergency savings No, I need to build emergency fund

Employer 401(k) Match Available? ⓘ

Yes, my employer offers matching No employer match available

Stress Level from Debt (1-10) ⓘ

Low Stress (1) 5 High Stress (10)

Loan Forgiveness Eligibility ⓘ

Yes, I'm eligible No, not eligible Unsure

Investment Preferences

Risk Tolerance ⓘ

Investment Timeline ⓘ

Try Sample Scenarios

Click on these scenarios to see how the tool works with different situations:

Recent Graduate

High interest loans, starting career

$50,000 loan at 8.5% $55,000 income

Mid-Career Professional

Low interest loans, established income

$25,000 loan at 4.2% $75,000 income

Your Personalized Recommendation

Financial Analysis

Debt-to-Income Ratio:

Loan Interest Rate:

Expected Investment Return:

Decision Score:

Projected Outcomes (10 Years)

Financial Education

Key Financial Concepts

Compound Interest

The "eighth wonder of the world" - earning returns on your returns over time. The earlier you start, the more powerful this becomes.

Opportunity Cost

What you give up when choosing one option over another. Money used to pay off loans can't be invested for potential growth.

Risk vs Return

Generally, higher potential returns come with higher risk. Loan payoff provides guaranteed returns equal to your interest rate.

Time Value of Money

A dollar today is worth more than a dollar tomorrow due to inflation and earning potential. Time is your greatest asset.

Comparing Your Options

Paying Off Loans

Pros:

Guaranteed return equal to interest rate
Eliminates monthly payment obligation
Reduces debt-to-income ratio
Peace of mind and reduced stress

Cons:

Miss potential higher investment returns
Lose liquidity (money is 'gone')
May miss employer 401k matching
Opportunity cost of compound growth

Investing Instead

Pros:

Potential for higher returns than loan interest
Compound growth over time
Maintains liquidity and flexibility
Building wealth for long-term goals

Cons:

No guaranteed returns - market risk
Continued debt payments and interest
Stress of carrying debt while investing
Volatility and potential losses

Implementation Tips

Start with the Basics

Build emergency fund first (3-6 months expenses)
Get full employer 401k match if available
Pay minimum on all debts

High Interest Debt Priority

Pay off loans above 7-8% interest first
Consider refinancing high-rate loans
Focus on credit card debt before student loans

Investment Strategy

Use tax-advantaged accounts first (IRA, 401k)
Consider low-cost index funds
Don't try to time the market

Hybrid Approach

Split extra money between loans and investments
Adjust ratio based on market conditions
Review and rebalance regularly