How is student loan interest calculated?

Student loan interest is typically calculated daily using simple interest. The daily interest charge equals your outstanding balance multiplied by your interest rate divided by 365.25. Each monthly payment covers the accrued interest first, with the remainder applied to principal.

What is the standard repayment plan for federal student loans?

The standard repayment plan for federal student loans is a 10-year fixed payment plan. You make equal monthly payments over 120 months. This plan typically results in the lowest total interest cost compared to extended or income-driven repayment plans.

Should I pay more than the minimum on my student loans?

Paying more than the minimum reduces your principal faster, which decreases total interest paid and shortens your payoff timeline. Even small extra payments can save thousands of dollars. However, first ensure you have an emergency fund and are meeting any employer 401(k) match.

Can I refinance my student loans to get a lower rate?

Yes, private lenders offer student loan refinancing that can lower your interest rate if you have good credit and stable income. However, refinancing federal loans into a private loan means losing access to federal benefits like income-driven repayment, Public Service Loan Forgiveness, and deferment options.

Student Loan Calculator

Calculate your monthly payment, total interest, payoff date, and view a full amortization schedule.

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Loan Balance ($)

Interest Rate (% p.a.)

Loan Term (years)

Monthly Payment

Total Interest

Total Paid

Payoff Date -- Number of Payments 0

Amortization Schedule

Month	Payment	Principal	Interest	Balance

How Student Loan Repayment Works

Student loans are a common way to finance higher education in the United States. Federal student loans typically offer fixed interest rates set by Congress, while private student loans may have fixed or variable rates set by the lender. Understanding how your monthly payment is calculated and how interest accrues helps you plan your repayment strategy and potentially save thousands of dollars over the life of the loan.

The Monthly Payment Formula

For a standard repayment plan, the monthly payment is calculated using the amortization formula: M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1), where P is the loan principal, r is the monthly interest rate, and n is the total number of payments. Each payment covers the accrued interest first, and the remainder reduces your principal balance.

Repayment Strategies

The standard federal repayment plan spans 10 years with fixed monthly payments. Income-driven repayment plans cap payments at a percentage of your discretionary income but extend the repayment period. Making extra payments or paying more than the minimum each month reduces your principal faster, decreasing total interest. You can also explore refinancing to a lower interest rate if you have strong credit.

Use this calculator to compare different repayment scenarios. Toggle between solving for monthly payment or loan term to see how adjusting either value affects your total cost and payoff timeline. The amortization chart below shows exactly how your balance decreases over time.

Formula

PMT = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ − 1]

Where:

PMT = monthly student loan payment
P = total loan principal
r = monthly interest rate (annual rate ÷ 12)
n = total number of monthly payments (repayment term in months)

Example Calculation

Scenario: $40,000 student loan at 5.5% interest, standard 10-year repayment

Step 1: Monthly rate r = 5.5% ÷ 12 = 0.004583
Step 2: Total payments n = 10 × 12 = 120
Step 3: PMT = $40,000 × [0.004583(1.004583)¹²⁰] / [(1.004583)¹²⁰ − 1]
Result: Monthly payment = $434.05 | Total interest paid = $12,086.00

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for decisions specific to your situation.