Education
Calculate your monthly payments and total costs for various student loan repayment plans
What this calculator does
Student loan repayment is the process of paying back borrowed money used for education expenses, typically beginning six months after graduation or leaving school. Federal student loans offer several repayment plan options: Standard Repayment (fixed payments over 10 years), Graduated Repayment (payments start low and increase every two years), Extended Repayment (up to 25 years for large balances), and Income-Driven Repayment plans that cap payments based on your income and family size. Understanding your repayment options is critical because the plan you choose affects your monthly budget, total interest paid, and timeline to debt freedom. With average student debt exceeding $30,000 for graduates, selecting the wrong plan can cost thousands in additional interest or leave you struggling with unaffordable monthly payments.
How it works
Monthly student loan payments are calculated using an amortization formula that considers three factors: principal (amount borrowed), interest rate, and loan term. The formula divides your total debt plus interest into equal monthly payments. Each payment covers two components: interest charges and principal reduction. Early in repayment, most of your payment goes toward interest. Over time, as the principal decreases, more of each payment reduces your balance. For example, a $40,000 loan at 7% interest over 10 years results in a $464.43 monthly payment, with total interest paid of approximately $15,731.
Formula
M = P x [r(1+r)^n] / [(1+r)^n - 1], where M = monthly payment, P = principal loan amount, r = monthly interest rate (annual rate divided by 12), and n = total number of payments (loan term in months). For a $30,000 loan at 6% annual interest over 10 years: r = 0.06/12 = 0.005, n = 120 months, M = $30,000 x [0.005(1.005)^120] / [(1.005)^120 - 1] = $333.06 per month.
Tips for using this calculator
- Accept subsidized loans before unsubsidized loans since the government pays interest while you are in school, saving you money over the life of the loan.
- Make interest-only payments while in school or during grace periods to prevent interest capitalization, which adds unpaid interest to your principal balance.
- Consider Income-Based Repayment (IBR) if your payments exceed 10-15% of your discretionary income, as this plan caps payments and offers forgiveness after 20-25 years.
- Set up autopay to receive a 0.25% interest rate reduction offered by most federal loan servicers, which can save hundreds over your repayment term.
- Apply any extra payments directly to principal by contacting your servicer, and target the highest-interest loan first to minimize total interest paid.
Frequently asked questions
What is the difference between subsidized and unsubsidized loans?
Subsidized loans are available only to undergraduate students with demonstrated financial need, and the government pays the interest while you are enrolled at least half-time, during your grace period, and during deferment. Unsubsidized loans are available to both undergraduate and graduate students regardless of financial need, but interest begins accruing immediately from disbursement. Both loan types have the same interest rates and origination fees, but subsidized loans cost significantly less over time because you avoid interest accumulation during school. Always accept subsidized loans first before taking unsubsidized loans.
Can I change my repayment plan after starting?
Yes, you can change your federal student loan repayment plan at any time for free by contacting your loan servicer or logging into StudentAid.gov. You can switch between Standard, Graduated, Extended, and Income-Driven Repayment plans based on your financial situation. However, switching plans may affect your monthly payment amount, total interest paid, and forgiveness timeline. If you switch from an income-driven plan to a standard plan and then back, any payments made during that time may not count toward income-driven forgiveness. Consider your long-term goals before switching.
How does interest capitalization work?
Interest capitalization occurs when unpaid accrued interest is added to your principal loan balance, causing you to pay interest on interest going forward. For example, if $2,000 in interest accrues during a deferment period and capitalizes, your new principal becomes the original amount plus $2,000, and all future interest calculations use this higher balance. Capitalization typically happens after grace periods end, when deferment or forbearance ends, when you leave or change income-driven repayment plans, or when you miss payments. You can avoid capitalization by paying at least the interest that accrues during these periods.
What are income-driven repayment plans?
Income-driven repayment (IDR) plans set your monthly payment based on your income and family size rather than your loan balance. Income-Based Repayment (IBR) caps payments at 10-15% of discretionary income with forgiveness after 20-25 years. Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) are being phased out by 2028 under recent legislation. A new Repayment Assistance Plan (RAP) will launch by July 2026, offering payments based on adjusted gross income with forgiveness after 30 years. IDR plans can provide payment relief but often result in paying more total interest due to extended terms. Any forgiveness received may be treated as taxable income.
