About this calculator
Student loans are uniquely dangerous because of one feature: negative amortization. If your payment is less than the interest accruing, the balance grows every month, and a loan that feels manageable can quietly become unpayable over decades.
How it works
This calculator runs your minimum-payment scenario and your extra-payment scenario side by side, then compares the extra cash against what it would become if invested. The comparison is not automatic: paying off 7% debt is a guaranteed return, whereas investing carries risk.
Frequently asked questions
Why does my student loan balance go up?
Because the payment is less than the interest accruing. Unpaid interest is capitalized, and the balance grows. You need a payment above the monthly interest to reduce principal.
Should I pay off student loans or invest?
If the loan rate exceeds what you can reliably earn after tax, paying it off is a guaranteed return and usually right. Below roughly 5%, investing while paying minimums can be reasonable once your emergency fund is complete.
Does extra payment always save money?
On federal loans with no prepayment penalty, yes. Every extra dollar reduces principal, which reduces the interest that accrues thereafter. The earlier you start, the larger the effect.
Is refinancing worth it?
It can be, if you qualify for a meaningfully lower rate and the new fixed payment still covers the interest. Compare over the full term, not just the monthly payment, since a longer term can cost more in total.
What happens if I default on a student loan?
Federal loans default after nine months of non-payment. Consequences are severe: wage and tax refund garnishment, loss of future aid eligibility, and years of credit damage. Contact the servicer early if payment is a problem.
Can I pay off private student loans early?
Yes. Check for a prepayment penalty clause first. Most do not have one, and early payoff directly reduces total interest.