How Student Loan Payoff is Calculated
For Standard and Private repayment plans, monthly payment = P × [r(1+r)^n] / [(1+r)^n−1], where P is the loan balance, r is the monthly interest rate, and n is the number of payments (120 for Standard 10-year). For income-driven plans, the payment is estimated at 10% of your discretionary income divided by 12.
Federal vs Private Student Loans
Federal loans offer income-driven repayment plans, forbearance options, PSLF eligibility, and potential forgiveness programs. Private loans are based on creditworthiness, have higher rates for many borrowers, and lack federal protections. Before refinancing federal loans to private, be sure you will not need IDR plans or PSLF.
The Power of Extra Payments
Even $50–$100 extra per month on student loans can save thousands in interest and shave years off your repayment timeline. Use the extra payment field and the comparison table to see your specific savings. Make sure your servicer applies extra payments to principal, not future payments.
Frequently Asked Questions
The Standard Repayment Plan pays off federal student loans in 10 years (120 equal monthly payments). It has the highest monthly payment but the lowest total interest cost of any repayment plan. It is the default plan for most federal loan borrowers.
IDR plans cap monthly payments at a percentage of discretionary income. Main plans: IBR (Income-Based Repayment) — 10% of discretionary income for new borrowers; PAYE (Pay As You Earn) — 10% of discretionary income; SAVE (Saving on a Valuable Education) — 5%–10% of discretionary income. Remaining balance is forgiven after 20–25 years.
PSLF forgives the remaining balance of federal Direct Loans after 120 qualifying monthly payments (10 years) while working full-time for a qualifying government or nonprofit employer. You must be enrolled in an IDR plan. There is no income tax on forgiven amounts under PSLF.
If your student loan interest rate is below 5%, many financial advisors suggest prioritizing investing (especially in tax-advantaged accounts) since expected stock market returns (7%) exceed the loan rate. Above 7% interest, paying off loans first is usually mathematically better. Between 5%–7%, consider doing both.
Extra payments can save thousands. On a $30,000 loan at 6.5% over 10 years, paying $100 extra per month saves $1,847 in interest and pays off the loan 2 years and 3 months early. Use the extra payment comparison in our calculator to see your specific savings.
The average federal student loan debt per borrower is approximately $37,000–$43,000 as of 2026. Graduate and professional school borrowers average significantly more ($65,000–$200,000 for law/medical degrees). Total U.S. student loan debt exceeds $1.7 trillion.
You can refinance federal loans into a private loan to potentially get a lower interest rate. However, refinancing federal loans means losing federal protections: IDR plans, PSLF eligibility, forbearance options, and income-driven forgiveness. Only refinance federal loans if you are certain you will not need these protections.
Subsidized federal loans (for undergrads with financial need): the government pays interest while you are in school and during deferment. Unsubsidized loans (all eligible students): interest accrues immediately from disbursement, even while in school. Both have the same repayment options.
Federal student loan forbearance temporarily postpones or reduces payments when facing financial hardship. Interest continues to accrue during most forbearance periods (except some COVID-related pauses). Forbearance extends your payoff date and increases total interest cost. Use only when necessary.
You can deduct up to $2,500 in student loan interest per year if your MAGI is below $80,000 (single) or $165,000 (MFJ) for 2026. The deduction phases out above $80,000/$165,000 and is unavailable to MFS filers. This is an above-the-line deduction — you do not need to itemize to claim it.