Finance category
Mortgage, loan, investing, tax, and money calculators.
Student Loan vs Mortgage Payoff Calculator
Where should your extra cash go? Student loans usually have higher nominal rates, but tax treatment and federal loan protection complicate the picture. This calculator compares effective after-tax rates and recommends a priority.
Recommendation
Pay mortgage first
Effective student loan rate
5.07%
Effective mortgage rate
7.12%
Rate spread
2.05%
higher rate wins
First-year interest savings
$160
How the math works
Pay down the debt with the highest after-tax effective rate first. Student loan interest deduction (up to $2,500/yr under income limits) reduces effective rate. Mortgage interest deduction helps only if you itemize — most don't post-2017.
Federal student loans have other non-rate considerations: income-driven repayment plans, potential forgiveness (PSLF, teacher), and deferment options. Don't accelerate payoff on federal loans expected to be forgiven.
How to Use
- Enter both balances and rates.
- Indicate whether you itemize for mortgage interest deduction.
- Indicate student loan interest deduction eligibility (up to $2,500/yr under income cap).
- Enter extra monthly cash available.
Frequently Asked Questions
Why would I not pay off student loans first?
Federal student loans have IDR plans (income-driven repayment) that cap payment at 5-10% of discretionary income with forgiveness at 20-25 years. If you're on track for PSLF or IDR forgiveness, paying extra destroys forgiveness value.
Is the student loan interest deduction worth much?
Up to $2,500/year of interest, phased out between $80-95k single / $165-195k joint AGI. At 22% marginal rate, that's $550 max tax savings. Not enormous but affects the effective rate calculation.
What about the mortgage interest deduction?
Only helps if you itemize. Most homeowners take the standard deduction ($31,500 joint 2026) post-2017. Run the Mortgage Interest Deduction vs Standard Deduction calculator to confirm your actual benefit.
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