Calculate if Student Loans are Worth it

Find how how much extra you need to earn per month and per year to break-even on your student loans. One of the important factors of this calculator is to also pay back yourself for the money that you paid out of pocket. Calculate if the extra educational debt plus what you spent out of pocket is worth it to you. This assumes you would have invested your total out of pocket, your lost wages, and the incremental raise you got from being more educated.

If you aren't sure about a number leave the default value as a starting point, and play around with the different options.

Total Out of Pocket Amount (include tuition, supplies, extra living expenses)
$
Total Student Loan Amount
$
Annual Student Loan Interest Rate
%
Loan Length (Years)
years
Total Lost Wages from Going to School instead of Working
$
%

  • Your Total Out of Pocket Amount (include tuition, supplies) can also include living expenses if your living expenses increased as a result of going to school from things such as moving costs, higher rent, short term leases, and health insurance.
  • Your Personal Cost of Capital is basically what your money could have done for you if you hadn't used it for school. The default rate is 7% which is equal the average annual return from stocks.
  • Your Total Lost Wages from Going to School instead of Working is how much you would have earned if you had been working instead of going to school. So if you are going to school full-time, you should include all the wages that you could have earned across all the years you're in school.
If there is a cost that doesn't apply in your situation, just put a zero in the field.

Education Pay Back Results

On an annual basis you will need to earn at minimum $12,100 extra (post-tax) to break even over the 10 years of the loan. This raise is calculated to match how much if you had invested your out of pocket costs and lost wages for the length of your loan payback. Over the course of those years, if you had invested your $60,000 you could have had $110,308 by the end of those 10 years.

Your raise is compared to this amount by subtracting out loan payments, and then the net of that is assumed to be invested. So for example for year 1, if your raise is $12,100 minus your loan payments of $4,143 to get $7,957.

For year 2, you take $7,957 multiplied by your personal cost of capital of 7% which is $557. Add that to the year 1 total to get 8,514. Then add another year's worth of raises and loan payments, to get a total of $16,471 for year 2.

YearHow much you would have earned investingRaise minus Loans, invested annually
1$60,000$7,957
2$64,200$16,471
3$68,694$25,581
4$73,503$35,329
5$78,648$45,759
6$84,153$56,920
7$90,044$68,861
8$96,347$81,638
9$103,091$95,310
10$110,308$109,939
Click or hover over the pie chart to see the component values.

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