Student Loan Calculator — Repayment Plan Calculator
| Plan | Monthly Payment | Total Interest | Total Cost | Term |
|---|---|---|---|---|
| Standard (10yr) | $340.64 | $10,877.27 | $40,877.27 | 120 mo |
| Extended (25yr) | $202.56 | $30,768.64 | $60,768.64 | 300 mo |
| Standard + $100/mo | $440.64 | $7,530.29 | $37,895.38 | 86 mo |
How Student Loan Repayment Is Calculated
Student loans — both federal and private — use the same standard amortizing payment formula as any other installment loan. Each monthly payment covers the interest that accrued on the outstanding balance, with the remainder reducing principal. Early payments are mostly interest; later payments are mostly principal.
The critical difference from other loan types is the variety of federal repayment plans available and the potential for income-driven or service-based loan forgiveness — options not available for auto loans, mortgages, or personal loans.
The Student Loan Payment Formula
M = P × [r(1+r)n] / [(1+r)n − 1]
| Variable | Meaning | Example ($30,000 at 6.5%) |
|---|---|---|
| M | Monthly payment | $340.08 |
| P | Loan balance | $30,000 |
| r | Monthly rate (annual ÷ 12) | 6.5% ÷ 12 = 0.5417% = 0.005417 |
| n | Number of payments | 120 (10 years) |
Worked Example — $30,000 at 6.5%
Federal vs. Private Student Loans
The type of loan determines what repayment options and protections you have:
| Feature | Federal Loans | Private Loans |
|---|---|---|
| Interest Rate (2025-26) | 6.53% undergrad; 8.08% grad | 4-16% (credit-dependent) |
| Income-Driven Repayment | Yes (SAVE, IBR, PAYE, ICR) | No |
| Public Service Forgiveness | Yes (PSLF) | No |
| Deferment / Forbearance | Yes, multiple options | Limited; lender-specific |
| Interest Subsidy | Subsidized loans: no interest while enrolled | No |
| Origination Fee | 1.057% (Direct); 4.228% (PLUS) in 2025 | 0-5% |
| Credit Check Required | No (Direct); Yes (PLUS) | Yes |
| Discharge in Bankruptcy | Possible but difficult | Possible but difficult |
Federal Repayment Plan Comparison
For a $30,000 balance at 6.5%, here is how the main plans compare:
| Plan | Monthly Payment | Term | Total Interest | Best For |
|---|---|---|---|---|
| Standard | $340 | 10 years | $10,810 | Minimize total interest |
| Graduated | $190 → $380 | 10 years | ~$13,200 | Low income now, higher later |
| Extended Fixed | $202 | 25 years | $30,546 | Need low monthly payment |
| SAVE (IDR) | Varies (5-10% discretionary) | 20-25 years | Varies; remainder forgiven | Low income, PSLF eligible |
SAVE (Saving on a Valuable Education), which replaced REPAYE in 2023, is the newest and generally most favorable income-driven plan. Monthly payment = 5% of discretionary income above 225% of the federal poverty line for undergraduate loans. Unpaid interest does not capitalize under SAVE.
Income-Driven Repayment Plans (IDR)
IDR plans cap monthly payments as a percentage of discretionary income and forgive remaining balances after 20-25 years. The four current plans:
- SAVE — 5% of discretionary income (undergrad), 10% (grad), 20-year forgiveness for undergrad borrowers with balances under $12,000 (scaled up to 25 years for larger balances).
- PAYE — 10% of discretionary income, 20-year forgiveness. Requires pre-October 2007 loans.
- IBR — 10% (new borrowers) or 15% (older borrowers) of discretionary income, 20-25 year forgiveness.
- ICR — 20% of discretionary income or fixed 12-year payment, whichever is less. 25-year forgiveness.
Important: Forgiven amounts under standard IDR plans are currently treated as taxable income in the year of forgiveness. PSLF forgiveness is tax-free.
Should You Pay Off Student Loans Early?
The math depends on your loan rate vs. expected investment return:
- If loan rate < 5%: Investing extra money in a diversified portfolio typically outperforms prepayment mathematically.
- If loan rate 5-7%: A toss-up. Factor in risk tolerance and psychological value of being debt-free.
- If loan rate > 7%: Prepayment is likely the best guaranteed use of extra money, unless pursuing PSLF.
- If pursuing PSLF: Never pay extra — the goal is forgiveness, not payoff. Make minimum payments on an IDR plan.
Always capture your full employer 401(k) match before paying extra on student loans. That match is an instant 50-100% guaranteed return — far better than any loan interest rate.
Frequently Asked Questions
What are the main federal student loan repayment plans?
Federal student loans offer several repayment plans: Standard (fixed payments over 10 years — pays the least total interest); Graduated (lower payments early, increases every 2 years, 10-year term); Extended (up to 25 years, lower monthly payments but more total interest — available for balances over $30,000); Income-Driven Repayment (IDR) plans tie payments to 5-10% of discretionary income with 20-25 year forgiveness windows. Private loans generally only offer fixed or variable-rate plans negotiated with the lender.
How does the student loan repayment formula work?
Student loans use the standard amortizing loan formula: M = P × [r(1+r)^n] / [(1+r)^n − 1]. P is the balance, r is the monthly interest rate (annual ÷ 12), and n is the number of monthly payments. For a $30,000 loan at 6.5% on the standard 10-year plan: r = 0.00542, n = 120, M = $340.08/month. Total interest paid: $10,809. Under extended (25-year): $201.82/month but $30,547 in total interest — nearly the entire principal again.
What are the 2025 federal student loan interest rates?
Federal student loan rates are set annually each July 1, tied to the 10-year Treasury note yield plus a fixed add-on. For 2025-2026: undergraduate Direct Subsidized and Unsubsidized Loans: 6.53%; Graduate Direct Unsubsidized Loans: 8.08%; Direct PLUS Loans (parents and grad students): 9.08%. Private loan rates vary by lender and creditworthiness, typically 4-16% fixed or variable.
When does student loan forgiveness apply?
Several forgiveness programs exist: Public Service Loan Forgiveness (PSLF) forgives remaining balance after 120 qualifying payments (10 years) while working full-time for a qualifying employer (government, non-profit). Income-Driven Repayment forgiveness after 20-25 years of IDR payments — but forgiven amounts may be taxable. Teacher Loan Forgiveness offers up to $17,500 after 5 years of teaching in low-income schools. These programs require specific loan types (Direct Loans) and repayment plans.
Should I pay off student loans early or invest the extra money?
If your student loan interest rate is below 6%, investing in a diversified equity portfolio (historically 7-10% return) typically wins mathematically. Above 7%, paying off student loans first is often the better guaranteed return. For rates between 6-7%, the decision depends on risk tolerance — loan payoff is a guaranteed return equal to the interest rate; investments carry market risk. Always capture any employer 401(k) match before paying extra on loans — that is a guaranteed 50-100% return.
Related Calculators
- Loan Calculator — Generic amortizing loan payments and interest
- Debt Payoff Calculator — Snowball vs. avalanche payoff strategies
- Salary Calculator — After-tax take-home pay to budget loan payments
- Amortization Calculator — Full month-by-month payment schedule with extra payments