Student Loan Payoff Calculator

How student loan interest works

Most student loans accrue interest daily on the outstanding principal, then charge it monthly. Your payment covers the accrued interest first; only what remains reduces the principal. Federal loans carry a fixed rate set in the year you borrowed, so someone with six years of study can easily hold half a dozen loans at different rates — which is why it helps to see them as one combined plan.

The standard repayment plan is simply a payment size calculated to clear the balance in ten years. It is a default, not a rule. Nothing stops you paying more, and nothing stops you paying more on one loan than another.

A worked example

The two loans loaded above total $30,500: $21,000 of federal unsubsidised debt at 6.53% paying $240, and a $9,500 private loan at 9.25% paying $130. Interest in the first month comes to roughly $187 across the two, so of the $370 paid, only about $183 reduces the balance.

Held flat, those payments take roughly nine years. Round the total up to $420 — an extra $50 — and the payoff moves in by more than a year, saving a substantial amount of interest. Direct that extra at the 9.25% private loan rather than splitting it, and the saving grows again. Try both orders with the toggle above to see the gap on your own loans.

When not to pay extra

This is the one debt where paying faster is not automatically right. If you are working toward Public Service Loan Forgiveness or a forgiveness date under an income-driven plan, extra payments shrink a balance that is destined to be cancelled — money you simply lose. The same goes for anyone likely to need income-driven relief later: keeping cash in an emergency fund can be worth more than the interest saved.

If you are confident you will repay in full, the opposite applies and every extra dollar is straightforwardly worth it.

Refinancing trade-offs

Refinancing federal loans with a private lender can lower your rate, but it is irreversible: you give up income-driven repayment, deferment, forbearance and all forgiveness programs. Refinancing private loans carries no such downside. Model the payoff here at both rates before deciding whether the interest saving justifies losing the federal safety net.

What this calculator does not model

Income-driven repayment, interest subsidies, forgiveness, deferment, forbearance and capitalisation events are all outside its scope. It assumes fixed rates, on-time payments and simple monthly interest. Enter your current balances after any capitalisation, and check the figures against your servicer's statements.