Student Loan Calculator

Student loans are specialized financing designed to cover education costs including tuition, fees, books, and living expenses. Federal student loans, offered by the U.S. Department of Education, provide fixed interest rates, flexible repayment options, and borrower protections like deferment and forbearance. Private student loans from banks and credit unions typically offer variable rates based on creditworthiness and lack the protections of federal loans. Understanding the differences between loan types is crucial for making informed borrowing decisions.

The grace period—typically 6 months after graduation, leaving school, or dropping below half-time enrollment—provides a buffer before repayment begins. However, interest continues accruing during this period on most loans. When repayment starts, unpaid interest is capitalized (added to your principal balance), permanently increasing the amount you owe. For example, on a $30,000 loan at 6% interest with a 4-year school period plus 6-month grace, approximately $8,100 in interest accrues. If not paid, this is added to your principal, making your new balance $38,100—and you'll pay interest on that higher amount for the life of the loan. Use our Loan Calculator to compare different repayment scenarios.

Federal student loans offer multiple repayment plans beyond the standard 10-year option. Income-Driven Repayment (IDR) plans—including Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE)—cap monthly payments at 10-20% of discretionary income and forgive remaining balances after 20-25 years. While these plans provide affordability, you'll pay significantly more interest over time. For instance, a $50,000 loan at 6% costs $55,500 total on the standard plan but can exceed $80,000 on IDR plans due to extended terms and interest accrual.

Interest rates on student loans vary by loan type and disbursement date. Federal Direct Subsidized and Unsubsidized Loans for undergraduates currently carry rates around 5-6%, while Graduate PLUS and Parent PLUS loans are higher at 7-8%. Private student loan rates range from 3-14% depending on your credit score, income, and whether you choose fixed or variable rates. Even a 2% rate difference dramatically impacts total cost: on a $40,000 loan over 10 years, 5% interest costs $8,485 while 7% costs $12,045—a $3,560 difference. Compare true borrowing costs with our APR Calculator.

Refinancing student loans can lower your interest rate and monthly payment, but comes with significant trade-offs. When you refinance federal loans through a private lender, you permanently lose federal benefits including income-driven repayment plans, loan forgiveness programs (Public Service Loan Forgiveness), deferment and forbearance options, and potential future relief programs. Only refinance federal loans if you have stable high income, don't need these protections, and can secure a rate at least 1-2% lower. Private student loans can be refinanced without losing benefits since they never had federal protections.

The total amount you should borrow depends on your expected post-graduation income. Financial experts recommend keeping total student loan debt below your anticipated first-year salary. If you'll earn $50,000 annually, aim to borrow no more than $50,000 total for your entire education. Your monthly payment should not exceed 10-15% of gross monthly income. Borrowing $100,000 to earn a $40,000 salary creates financial hardship and limits your ability to save, buy a home, or pursue other goals. Before borrowing, research average salaries in your field and calculate whether your loan payments will be manageable on that income.