Student Loan Calculator

About the Student Loan Calculator

Student loans have unique rules that make them different from any other debt: income-driven repayment, forgiveness programs, deferral and forbearance options, and federal vs private distinctions that matter enormously. This calculator handles standard repayment; this page explains the options that can save tens of thousands.

The Formula

Standard repayment: same monthly payment for 10 years (federal) or as agreed (private). M = P × r × (1+r)^120 ÷ ((1+r)^120 − 1) with r = annual rate ÷ 12. Income-driven plans cap payments at 10-20% of discretionary income.

Worked Example

$40,000 federal student debt at 5.5% average rate. Standard 10-year: $434/month, total $52,090. Income-driven (10% of discretionary income) for someone earning $50,000: payment may be just $250/month early-career, with potential forgiveness after 20-25 years.

Federal vs private — never confuse them

Federal loans (Direct Subsidized, Unsubsidized, PLUS) qualify for income-driven repayment, Public Service Loan Forgiveness (PSLF), and broad forbearance. Private loans (Sallie Mae, SoFi, etc.) have none of these. Refinancing federal loans into private to get a lower rate permanently gives up all federal protections — only do this if you're certain you won't need them.

Income-driven repayment plans

Four current plans: SAVE, PAYE, IBR, ICR. They cap your monthly payment at 5-20% of discretionary income (defined as AGI above 150-225% of poverty line). Unpaid interest may be partially subsidized. Remaining balance is forgiven after 20-25 years — but forgiven amount may be taxable as ordinary income.

PSLF: a real path to forgiveness

Public Service Loan Forgiveness wipes the balance after 120 qualifying payments while employed full-time by a government or qualifying non-profit. After the 2022 PSLF Waiver corrections, success rates have risen sharply. Annual employment certification and tracking each payment is critical — submit the form yearly.

Common Mistakes

• Refinancing federal loans into private to get a 1% lower rate, then losing access to forgiveness and income-driven repayment.
• Putting loans into deferment 'just to skip a few payments'. Interest still accrues and capitalises on unsubsidized loans.
• Not certifying employment annually for PSLF. The window to fix missing certifications is narrow.
• Paying off the smallest loan first when high-rate loans are accruing more interest.

Frequently Asked Questions

Should I refinance my student loans?
Only refinance private-to-private if you can lower your rate by 1%+. Never refinance federal-to-private unless you're 100% certain you won't need income-driven repayment or forgiveness.

Can student loans be discharged in bankruptcy?
Historically very difficult. Recent legal interpretations have made it slightly more accessible, but it still requires proving 'undue hardship' — a high bar.

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.