Calculate Your Student Loan Payoff
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Total Interest
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Total Cost
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Payoff Date
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Understanding Student Loan Repayment
The average student loan debt for a bachelor's degree graduate in the US is around $30,000-$35,000. Understanding your repayment options is critical to minimizing total cost and becoming debt-free as quickly as possible.
How Student Loan Interest Works
- Daily interest accrual: Interest accrues daily on your outstanding balance. Daily rate = annual rate / 365.
- Capitalization: Unpaid interest (from forbearance, deferment, or income-driven plans) gets added to your principal, causing you to pay interest on interest.
- Amortization: Early payments are mostly interest. Over time, more goes to principal. Extra payments accelerate this shift dramatically.
Federal Student Loan Interest Rates (2025-26)
| Loan Type | Rate | Borrower |
|---|---|---|
| Direct Subsidized | 6.39% | Undergraduate |
| Direct Unsubsidized | 6.39% | Undergraduate |
| Direct Unsubsidized | 7.94% | Graduate/Professional |
| Direct PLUS | 8.94% | Graduate/Parents |
Rates effective for loans first disbursed July 1, 2025 – June 30, 2026. Based on 10-year Treasury note auction (4.342%) plus statutory add-on. Private loan rates vary from 4-15% based on credit score and lender.
Federal Repayment Plans
| Plan | Term | Payment | Forgiveness |
|---|---|---|---|
| Standard | 10 years | Fixed | None |
| Graduated | 10 years | Starts low, increases every 2 years | None |
| Extended | 25 years | Fixed or graduated | None |
| SAVE Plan (Blocked) | 20-25 years | 5-10% of discretionary income | After 20-25 years |
| PAYE | 20 years | 10% of discretionary income | After 20 years |
| IBR | 20-25 years | 10-15% of discretionary income | After 20-25 years |
| ICR | 25 years | 20% of discretionary income | After 25 years |
Note (2025): The SAVE plan is currently blocked by a federal court injunction (8th Circuit, Feb 2025). Enrolled borrowers are in interest-free forbearance. PAYE and ICR have been reinstated as alternatives. Public Service Loan Forgiveness (PSLF) is unaffected.
The Power of Extra Payments
Even small extra payments make a massive difference. On a $35,000 loan at 6.5% over 10 years:
| Extra/Month | Payoff Time | Total Interest | Interest Saved |
|---|---|---|---|
| $0 | 10 years | $12,634 | — |
| $50 | 8.2 years | $10,092 | $2,542 |
| $100 | 7.0 years | $8,260 | $4,374 |
| $200 | 5.5 years | $6,109 | $6,525 |
| $500 | 3.2 years | $3,461 | $9,173 |
Key rule: When making extra payments, tell your loan servicer to apply the extra amount to principal only, not advance your due date.
Student Loan Forgiveness Programs
- Public Service Loan Forgiveness (PSLF): Federal loans forgiven after 120 qualifying payments while working for government or nonprofit. Tax-free forgiveness.
- Income-Driven Repayment Forgiveness: Remaining balance forgiven after 20-25 years of payments. Currently taxable as income (may change).
- Teacher Loan Forgiveness: Up to $17,500 forgiven for teachers serving 5+ years in low-income schools.
- State-Specific Programs: Many states offer loan repayment assistance for healthcare workers, lawyers, and public servants.
Related Calculators
Plan your complete financial picture:
Frequently Asked Questions
On a $35,000 federal loan at 6.5% on the standard 10-year plan, your monthly payment would be approximately $398. Total interest over 10 years: ~$12,634. Total cost: ~$47,634.
General rule: always get your employer's 401(k) match first (free money). Then, if your loan rate is above 6-7%, prioritize paying it off. If below 5%, investing in index funds may yield higher long-term returns. Rates between 5-7% are a toss-up — consider your risk tolerance.
Yes, you can deduct up to $2,500/year of student loan interest from your taxable income. The deduction phases out for single filers with MAGI between $80,000-$95,000 (MFJ: $165,000-$195,000). It is an above-the-line deduction — no itemizing required.
Federal consolidation combines multiple federal loans into one with a weighted average interest rate. It simplifies payments but doesn't lower your rate. Private refinancing can lower your rate but you lose federal protections (IDR, PSLF, forbearance). Consolidate for simplicity; refinance for a lower rate if you don't need federal protections.
For federal loans: apply for an income-driven repayment plan (payments as low as $0), request deferment or forbearance, or explore forgiveness programs. Never default — it damages your credit, triggers collection fees, and can lead to wage garnishment. For private loans: contact your lender to discuss hardship options.
Avalanche: pay minimums on all loans, put extra money toward the highest interest rate loan. Saves the most money. Snowball: pay minimums on all loans, put extra toward the smallest balance first for quick psychological wins. Both work — avalanche is mathematically optimal, snowball provides motivation.
Historically very difficult, but recent DOJ guidance (2022+) has made it more feasible. You must file an adversary proceeding and demonstrate that repaying the loans would cause undue hardship. Courts now use a more practical assessment rather than the strict Brunner test.