Pay Off Loans or Invest?
Put your extra cash toward the loan, or pay the minimum and invest the rest. See both paths, the break-even return, and how often investing actually wins.
These are example numbers. Answer a few questions and every calculator fills in with yours, saved in this browser.
Your loan
Your extra cash
Try your “Available to spend” from My Plan
Taxable account. Physicians usually earn too much to deduct student loan interest.
At 7%, a close call
Investing ends $4,488 ahead after 10 years, but only about 55% of the time
A · Pay off first, then invest
$313,315
Portfolio after 10 years, after tax
- Debt-free
- 4 yr 7 mo
- Interest paid
- $23,907
- Risk
- Guaranteed 5% on extra cash
B · Pay minimum, invest $2,000
$317,803
Portfolio after 10 years, after tax
- Debt-free
- 10 yr
- Interest paid
- $54,557
- Risk
- Ahead in ~55% of simulations
Net worth on each path
Investments minus loan balance, before tax on gains, at a steady 7%
| Point | A · Pay off first: $326,640 at 10 yr | B · Invest: $342,103 at 10 yr |
|---|---|---|
| Now | −$200,000 | −$200,000 |
| 2 yr | −$117,189 | −$116,307 |
| 4 yr | −$25,688 | −$21,782 |
| 6 yr | $76,366 | $85,006 |
| 8 yr | $193,050 | $205,686 |
| 10 yr | $326,640 | $342,103 |
Educational estimate. Both paths spend the same $4,121 a month. The probability comes from 5,000 simulated return paths at 7% expected return and 15% volatility. Returns are not guaranteed; the loan rate is.