Student Loan Calculator

The Two Types of Student Loans You Actually Have

US student loans come in two structurally different forms, and the most important decisions you make as a borrower depend on knowing which one you're dealing with. Federal loans are issued by the Department of Education, carry a fixed interest rate set by Congress, and come with a thick layer of borrower protections — income-driven repayment plans, deferment, forbearance, forgiveness in narrow circumstances, and discharge if the borrower dies or becomes permanently disabled. Private loans are issued by banks and non-bank lenders, carry a fixed or variable rate set by market underwriting, and have effectively none of the protections of federal loans.

If you don't know which type you have, log into StudentAid.gov: any loan listed there is federal. Anything not listed there is private.

Subsidized vs Unsubsidized (Federal Only)

Federal Direct Subsidized loans (available to undergraduates with demonstrated financial need) do not accrue interest while you are enrolled at least half-time, during the six-month grace period after graduation, or during periods of authorized deferment. Direct Unsubsidized loans accrue interest from the moment they are disbursed — and that interest capitalizes (gets added to the principal balance) when you enter repayment, meaning you pay interest on the interest. The difference can amount to several thousand dollars on the same nominal principal.

The Federal Loan Programs, Compared

"Federal loan" is not one thing. The program your loan came from determines its rate, whether interest is subsidized, and — critically — whether it qualifies for forgiveness without extra steps. This is the table nobody hands you at graduation:

The single most expensive misunderstanding in this table is the bottom two rows. Borrowers with FFEL or Perkins loans who make years of "PSLF payments" without first consolidating into a Direct Consolidation Loan discover, often at year eight, that none of those payments counted. If any part of your balance is FFEL or Perkins and PSLF is in play, consolidating to Direct is step zero — and consolidation generally restarts the 120-payment count, so the timing of that move matters enormously.

When Interest Capitalizes — the Expensive Moments

Capitalization is when accrued, unpaid interest is added to your principal balance, so you begin paying interest on that interest. It is the quiet mechanism that turns a $30,000 loan into a $34,000 balance before you make a single payment. The moments it typically happens:

• End of the grace period. Unsubsidized interest that accrued during school and the six-month grace period capitalizes when repayment begins.
• Exiting a deferment or forbearance. Interest accrued during the pause is added to principal when the pause ends.
• Leaving or losing eligibility for certain income-driven plans. Some plan exits trigger capitalization of the interest that was not being covered by the reduced payment.

The practical defense: if you can pay even the accruing interest on unsubsidized loans while still in school, you stop the balance from ballooning before repayment starts. A small voluntary interest-only payment during school is one of the highest-return moves in all of student lending, because it prevents years of compounding on capitalized interest.

How Student Loan Repayment Math Works

The standard repayment plan amortizes the loan over 10 years using the same formula as every other consumer loan:

EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

On $30,000 of federal loans at 6% over 10 years, the standard payment is about $333/month and total interest over the term is roughly $9,964. The standard plan is the most expensive in monthly terms but the cheapest in lifetime interest — the shortest amortization always wins on total cost.

Federal Income-Driven Repayment Plans

The most powerful — and most underused — feature of federal student loans is the family of income-driven repayment (IDR) plans. They cap your monthly payment as a percentage of discretionary income, with any unpaid balance forgiven after a long repayment period (typically 20–25 years). The plan landscape changes from time to time as Congress and the Department of Education revise it; as of writing the major plans are:

• SAVE (Saving on a Valuable Education): payments capped at 5% of discretionary income for undergraduate-only loans, 10% for graduate-only loans, or a weighted blend; remaining balance forgiven after 20–25 years; interest does not capitalize during repayment.
• PAYE (Pay As You Earn): 10% of discretionary income; 20-year forgiveness for new borrowers as of 2014; payment cannot exceed the standard 10-year payment.
• IBR (Income-Based Repayment): 10% or 15% of discretionary income depending on when you took your first loan; 20- or 25-year forgiveness.

IDR plans are designed for borrowers whose income relative to debt is too low for the standard payment to be sustainable. They are also the gateway to Public Service Loan Forgiveness (PSLF): borrowers who work full-time for a qualifying public-sector or nonprofit employer and make 120 qualifying payments under an IDR plan have their remaining balance forgiven tax-free.

A Worked IDR Example

Numbers make the value concrete. Take $60,000 of federal loans at 6% with a $48,000 salary, single, no dependents. On the standard 10-year plan the payment is about $666/month — nearly 17% of gross pay, brutal at that income. On an income-driven plan the payment is roughly 10% of discretionary income (income above 1.5× the poverty guideline), which works out to about $220/month in year one.

That cuts the required payment by two-thirds, freeing roughly $440/month — but it also means the loan is not being amortized away on schedule, so the balance lingers and interest accrues. For a borrower headed toward forgiveness (PSLF or the plan's 20–25 year forgiveness) that is the point: pay the capped amount, let the rest be forgiven. For a borrower not headed toward forgiveness, the low IDR payment is a cash-flow bridge, not a savings strategy — they will ultimately pay more interest than the standard plan unless they accelerate once income rises. The IDR plan is a tool whose correct use depends entirely on whether forgiveness is your destination.

The IDR Tax Bomb

Forgiveness under most non-PSLF IDR programs has historically been treated as taxable income in the year of forgiveness — meaning you could face a substantial tax bill on the forgiven amount. Recent legislation made IDR-forgiven balances tax-free through 2025, and various proposals would make that permanent, but the rules are in flux. Plan as if forgiveness might be taxable, and confirm the rules before relying on the "forgiven balance is free" assumption.

Refinancing — The Irreversible Trade

Private lenders advertise student loan refinancing as a no-brainer: take your federal loans, refinance them into a new private loan at a lower rate, save thousands. The math is real — a borrower with strong credit and stable income can sometimes shave 1–3 percentage points off their rate. What the marketing leaves out is what you give up.

When you refinance federal loans into a private loan, you permanently lose:

• Access to all income-driven repayment plans
• Eligibility for PSLF
• The death and disability discharge that comes standard with federal loans
• Generous deferment and forbearance options for unemployment, medical hardship, and economic hardship
• Any future federal forgiveness programs (which appear and change every few years)

These protections are valuable — extremely valuable in scenarios you may not be planning for today (job loss, career change into the public sector, disability, family leave). The refinance trade is mathematically attractive only if you are confident you will never need any of these protections, and if the rate reduction is large enough to justify giving them up.

A defensible decision tree for federal-to-private refi:

1. Are you working in (or considering) public service? Don't refinance — you may qualify for PSLF.
2. Is your income unstable, or do you anticipate a career gap? Don't refinance — IDR plans protect you in ways private lenders don't.
3. Are you saving toward a specific large goal where the monthly cash difference matters? Consider IDR first before refinancing.
4. Strong income, stable career, no public-service path, well-funded emergency reserves, and the new rate is at least 1.5–2 percentage points lower? Refinancing may be rational, but only on the portion you would not have gotten forgiven anyway.

Private Student Loans

Private student loans are simpler, less protected, and more market-priced than federal loans. Rates depend on your (or your cosigner's) credit profile and income; terms are typically 5 to 20 years; cosigners are commonly required for undergraduate borrowers.

Two practical points:

• Cosigner release — most private lenders allow cosigner release after 24–48 consecutive on-time payments, but the borrower has to actively request it. Many never do.
• Variable rates — many private loans are offered at variable rates that look attractive at issue and reset upward as benchmark rates rise. If you take a variable-rate private loan, build the assumption of a 2–4 percentage point rate increase into your repayment model.

Strategy by Borrower Situation

Recent Graduate, Federal Loans Only

• If your salary is well above your debt total, take the standard 10-year plan and pay extra principal when you can. This is the cheapest path.
• If your debt is roughly equal to or larger than your annual income, enroll in SAVE or PAYE. Run the numbers on PSLF if your work is or could be public-sector.
• Auto-debit usually shaves 0.25 percentage points off the rate. Set it up.

Mid-Career, High Income, Federal Loans

• Standard plan is almost always the cheapest unless you're pursuing PSLF.
• Refinancing to private becomes more defensible as your income stability rises.
• Maxing retirement contributions usually beats accelerating student loan payoff at federal rates of 4–7%.

Mixed Federal and Private

• Pay down highest-interest debt first, almost always the private loans.
• Keep federal loans on a plan whose payment fits your budget; the protections are valuable even if the rate is higher than what you could get refinancing.

Mistakes That Cost the Most

• Defaulting silently. Federal loans go into default after 270 days of missed payments. Default triggers wage garnishment, tax-refund seizure, and the loss of all flexible repayment options. If you cannot make your payment, contact your servicer and switch to IDR or request forbearance — both options keep you out of default.
• Stretching private loans to 20 years for a lower payment. Same trap as long-tenure mortgages and auto loans: marginally lower monthly payment, dramatically higher lifetime interest, and many additional years of carrying the debt.
• Refinancing without understanding what you give up. The single largest financial mistake in student loan management is refinancing federal loans to save a small amount of interest, then needing IDR or PSLF a year later — the protections are gone permanently.
• Not consolidating before applying for PSLF.Some federal loan types (FFEL, Perkins) don't qualify for PSLF directly but do qualify after consolidation into a Direct Consolidation Loan. Borrowers who don't consolidate may waste years of payments that don't count toward the PSLF total.

Use the Right Tool for Each Decision

Student-loan questions are not one decision; they are three distinct ones, and each has a dedicated calculator on this site built for exactly that question:

• PSLF Calculator — if you work (or might work) in government or non-profit, estimate your income-driven payment, what you pay over 120 months, and how much is forgiven tax-free. This is the single highest-stakes calculation a public-service borrower can run.
• Student Loan Refinance Calculator — compare keeping federal loans against refinancing into a private loan: the interest math and the full list of federal protections you would permanently forfeit. Run this before you ever sign a refinance offer.
• Student Loan Payoff Calculator — if you are not on a forgiveness track, model how an extra monthly amount or a lump sum shortens the payoff and slashes total interest, and apply avalanche or snowball ordering across multiple loans.

The decision tree is simple: public service → start with PSLF; considering a private refinance → run the refinance comparison first; definitely repaying in full → use the payoff simulator. Using the wrong tool for your situation is how borrowers make five-figure mistakes that the right one would have caught in thirty seconds.

Glossary

• Subsidized loan. The government pays the interest while you are in school, in grace, or in deferment. Direct Subsidized only.
• Unsubsidized loan. Interest accrues from disbursement and capitalizes into principal at repayment.
• Capitalization. Unpaid interest added to principal — after which you pay interest on that interest.
• IDR. Income-driven repayment — payment capped at a share of discretionary income; balance forgiven after 20–25 years (SAVE, PAYE, IBR, ICR).
• PSLF. Public Service Loan Forgiveness — tax-free discharge after 120 qualifying payments in government/non-profit work.
• Direct Consolidation Loan. A new Direct Loan that combines other federal loans, making FFEL/Perkins PSLF-eligible — but generally restarts the payment count.
• Discretionary income. Income above 1.5× the federal poverty guideline for your family size; the base for IDR payments.
• Default. Federal status after 270 days missed — triggers wage garnishment and loss of flexible options.

Bottom Line

Federal student loans are a uniquely flexible debt instrument — pay them down efficiently when you can, protect yourself with IDR when you need to, and treat any decision to refinance them into private loans as a one-way door. Private loans are simpler but offer no margin for error. The right repayment strategy depends as much on the stability of your income and your career path as it does on the interest rate.