See your monthly payment, total interest, and exactly how much you save by paying off early — in seconds.
Paying one additional monthly payment annually can shave 1–2 years off a 10-year loan and save thousands in interest.
Split your payment in half and pay every two weeks. You'll make 26 half-payments (13 full) per year without noticing.
If your credit score improves or rates fall, refinancing a $30,000 loan from 7% to 5% saves over $3,000 over 10 years.
Many servicers offer a 0.25% rate reduction for enrolling in autopay. Small, but completely free.
US federal IDR plans cap payments at 5–10% of discretionary income and may forgive remaining balances after 20–25 years.
Work for a qualifying employer for 10 years while making payments and your remaining federal balance is forgiven tax-free.
We use the standard amortization formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ−1] where P is principal, r is monthly interest rate, and n is number of payments. This matches the method used by all major loan servicers.
US federal undergraduate loans for 2024–25 are set at 6.53%. Graduate loans are 8.08%. Private loans range from ~4–15% depending on your credit. If your rate is above 7–8%, refinancing is worth exploring once you have stable income.
If your rate is above 6–7%, early payoff usually beats investing. Below 5%, you may earn more in an index fund. Use the calculator above to see your exact savings — then decide.
In the US you can deduct up to $2,500/year if your MAGI is below $75,000 (single) or $155,000 (married filing jointly). It's an above-the-line deduction — no itemizing needed.
Federal loans enter delinquency after one missed payment and default after 270 days. Default triggers wage garnishment and credit damage. Income-driven plans can lower payments to $0 if needed — always explore these first.
UK loans are income-contingent (9% of earnings above threshold), not fixed monthly amounts. This calculator applies to US federal/private loans and most international private loans.
Student loan debt in the United States has grown to over $1.7 trillion, spread across more than 43 million borrowers. The average graduate leaves college owing roughly $37,000 — but the number that rarely gets discussed upfront is how much that loan will actually cost by the time it's fully repaid. On a standard 10-year repayment plan at 6.5% interest, a $37,000 loan costs nearly $50,000 by payoff. That additional $13,000 is pure interest — money paid to a lender that builds no equity, earns no return, and cannot be recovered.
Understanding how your loan works before you start repaying it is one of the most financially impactful things you can do as a student or recent graduate. This guide walks through everything you need to know: how interest accrues, how your monthly payment is calculated, what your options are when money is tight, and how small changes in behavior can save you thousands of dollars.
Interest on most student loans accrues daily. Your lender takes your annual interest rate, divides it by 365, and multiplies it by your current balance to calculate the daily interest charge. If you have a $30,000 loan at 6.5% interest, you are accruing approximately $5.34 in interest every single day. Over a 30-day month, that is roughly $160 in new interest charges before you have made a single payment.
When you make a monthly payment, your servicer applies it first to any outstanding fees, then to accrued interest, and finally to your principal balance. This means that in the early years of repayment, the majority of each payment goes toward interest rather than reducing what you actually owe. On a $30,000 loan at 6.5% over 10 years, your first monthly payment of $340 applies approximately $163 to interest and only $177 to principal. By your final payment, nearly all of it goes to principal because the balance is much smaller.
This front-loading of interest is why paying even a small amount extra each month has a disproportionately large effect on total cost. Every extra dollar applied to principal in year one reduces the balance on which future interest accrues, creating a compounding savings effect over the remaining life of the loan.
Federal student loans are issued by the US Department of Education and come with a fixed interest rate set by Congress each year. For the 2024–25 academic year, rates are 6.53% for undergraduate Direct loans and 8.08% for Graduate Direct Unsubsidized loans. Federal loans do not require a credit check and come with a range of protections including income-driven repayment plans, deferment, forbearance, and potential forgiveness programs.
Private student loans are issued by banks, credit unions, and online lenders. Their interest rates vary widely — typically between 4% and 15% — based on your credit score and income. Private loans generally lack the repayment flexibility of federal loans. However, for borrowers with strong credit and stable income, private loan refinancing can offer significantly lower interest rates, resulting in substantial savings. The most important rule: exhaust all federal loan options before turning to private loans, and never refinance federal debt into private loans if you plan to pursue forgiveness programs.
Your monthly student loan payment is determined by three variables: your loan principal, your interest rate, and your repayment term. The standard calculation uses an amortization formula that produces a fixed monthly payment designed to reduce your balance to exactly zero by the end of the loan term. The formula is: M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where P is your principal, r is your monthly interest rate, and n is the total number of monthly payments.
A longer repayment term produces a lower monthly payment but significantly increases total interest paid. Extending a $30,000 loan at 6.5% from 10 years to 20 years reduces the monthly payment from $340 to $224, saving $116 per month, but increases total interest paid from $10,800 to $23,800. You pay over twice as much interest in exchange for the lower monthly payment. Use the calculator above to see exactly how different terms affect your total cost before choosing a repayment plan.
The Standard Repayment Plan spreads payments evenly over 10 years and results in the lowest total interest of any federal plan. It is the default and the one most borrowers should aim for if their income allows it. The Graduated Repayment Plan starts with lower payments that increase every two years, suiting borrowers who expect income to grow significantly over time.
Income-Driven Repayment (IDR) plans cap your monthly payment at a percentage of your discretionary income — typically between 5% and 10% — regardless of your loan balance. Any remaining balance after 20 or 25 years of qualifying payments is forgiven. IDR plans are particularly valuable for borrowers with high debt relative to income and for anyone pursuing Public Service Loan Forgiveness, which forgives remaining federal balances after 10 years of qualifying payments in a government or non-profit role.
Missing a student loan payment does not immediately create a crisis, but consequences escalate quickly if not addressed. After one missed payment your loan becomes delinquent. After 270 days without payment a federal loan enters default, triggering wage garnishment, seizure of tax refunds, and loss of eligibility for future federal financial aid.
You have options well before reaching default. Deferment pauses payments for up to three years for qualifying situations such as unemployment or economic hardship. Switching to an income-driven repayment plan can reduce your payment to as low as $0 per month if your income is sufficiently low — and $0 payments still count toward forgiveness milestones. If you are struggling, contact your loan servicer before missing a payment. The options available before default are far better than those available after.
Student loan refinancing means replacing one or more existing loans with a new private loan at a lower interest rate. When done at the right time with the right lender, refinancing can save tens of thousands of dollars. When done carelessly — particularly with federal loans — it can cost you valuable protections you may need later.
Refinancing is most beneficial when you have private student loans with high interest rates, a stable income, a strong credit score (typically 700 or above), and no intention of pursuing federal forgiveness programs. A reduction from 7.5% to 4.5% on a $50,000 balance over 10 years saves approximately $9,000 in total interest. The best time to refinance is when market rates are low, when your credit score has improved since you first took out your loans, or when increased income allows you to qualify for better terms.
If you have federal student loans and are enrolled in or planning to pursue an income-driven repayment plan, Public Service Loan Forgiveness, or any federal forgiveness program, do not refinance. Refinancing federal loans into a private loan permanently converts them to private debt. You lose access to IDR plans, PSLF, deferment options, and any future federal forgiveness programs. This trade-off is rarely worth making for borrowers in public service, those with high debt-to-income ratios, or those with variable income.
When evaluating refinancing offers, the annual percentage rate (APR) is the most important number — it reflects the true annual cost including any fees. Be cautious of variable interest rates, which start low but can increase significantly over time. Fixed rates provide payment certainty and are generally the safer choice for long-term loans.
Pay close attention to the loan term you select when refinancing. A lender offering a dramatically lower monthly payment may simply be extending your repayment term — which reduces your payment but increases total interest. Use the calculator at the top of this page to compare the total cost of your current loan against any refinancing offer before committing. Most reputable refinancing lenders allow borrowers to check their rate in minutes with no impact to their credit score, so shopping multiple lenders before deciding is always worthwhile.