Investment vs Student Loan Overpayment Calculator
Should you invest extra money or use it to overpay your student loan? Compare the potential returns to make the best financial decision.
For the reasoning behind why most borrowers are better off not overpaying, read should I overpay my student loan.
Important Considerations
This calculator provides estimates only. Consider your personal circumstances, emergency fund, and risk tolerance. Seek professional financial advice for complex situations.
How much extra money do you have available each month?
Used to work out your mandatory repayment in year one.
Salary rises in a straight line from £35,000 in year one to £50,000 in year 15, then stays there. Ignoring salary growth was one of the reasons the old version of this page got the answer wrong.
Compared over 30 years
That is your plan's write-off period, counted from the April after your course. It is the only horizon at which the question is settled: stop earlier and the loan still has a balance, which neither route has actually dealt with.[source]
Custom Expected Return
Historical stock market average is around 7-8% annually
Outcome: repaid in full
Invest
Investing the same money leaves you £36,912 better off after 30 years than paying it into the loan.
Both routes cost you the same each year: £200 a month plus your mandatory repayment. Only what you are left holding differs.
Invest or overpay?
If you invest: pot after 30 years
£201,124
£72,000 contributed at 6.0% a year
If you overpay: pot after 30 years
£164,212
£84,498 contributed once the loan stops absorbing it
Total repaid if you invest
£45,535
£33,201 written off
Total repaid if you overpay
£33,038
cleared in year 10
Difference
+£36,912
in favour of investing
Your loan rate (2026-27)
4.8%
versus a 6.0% assumed return
How this is worked out
(£35,000 − £29,385) × 9% = £505
Your mandatory repayment in year one on the 2026-27 threshold. You pay this whichever route you choose, so it is not part of the comparison.
How this is worked out
£200 × 12 × 30 years = £72,000
Cash deployed either way over 30 years, before any growth. The routes differ only in where it goes.
How this is worked out
£201,124 − £164,212 = £36,912
Positive means investing wins. Both sides already carry the same yearly outlay, so this single subtraction is the whole answer.
Why the overpaying route has a pot at all
Because it has to, for the comparison to be fair. Once the loan clears, the overpayment stops and so does the mandatory repayment. That freed cash is invested from that year on. A comparison that quietly lets the investing route keep contributing while the overpaying route stops is not comparing the same money.
Your Plan 2 loan (2026-27)
Rates, assumptions and sources
Every figure below is the 2026-27 published figure, read from this site's single source of truth at page-render time[source]. The 6% Plan 2 and Postgraduate interest cap covers the 2026/27 year only and is not assumed to continue[source].
| Plan | Threshold | Rate | Interest | Written off | Threshold freeze |
|---|---|---|---|---|---|
| Plan 2 | £29,385[source] | 9% | 4.1% to 7.1% by income, capped at 6% for 2026-27[source] | 30 years[source] | Frozen at £29,385 until April 2030 |
Write-off is counted from the April after the course ends, not from the course-end date itself, and the Plan 2 interest bands (£29,385 lower, £52,885 upper) are frozen alongside the Plan 2 repayment threshold.
This calculator also assumes
- Assumed investment return
- 6.0% a year (moderate, not guaranteed)
- Spare cash modelled
- £200 a month
- Salary path
- £35,000 rising to £50,000 over 15 years
- Comparison horizon
- 30 years
- Investment returns are
- an assumption; loan interest is not
Growth, inflation and long-run interest figures are assumptions, not published rates. Change them and the projection changes.
Related Calculators
Investment vs Student Loan Overpayment: Making the Right Choice
Deciding whether to invest extra money or use it to overpay your student loan is one of the most common financial dilemmas for graduates. This calculator helps you compare the potential outcomes of both strategies.
Need more detailed loan analysis?
Use our comprehensive loan calculators to see your complete repayment timeline and understand all your options.
Next step
- when overpaying helps and when it does not - Sets out when overpaying helps and when it does not.
- how interest is charged on your loan - Shows the current rate for each plan and how it is set.
- Plan 2 thresholds, interest and write-off - Covers repayment, interest and write-off for 2012 to 2023 starters in England and Wales.
- Check your write-off date - Enter your plan and course end year to get the month your balance is cancelled.