How a standard student loan payment works
On a fixed-payment plan, your loan is amortized like any other installment loan: the same payment every month, with part going to interest and the rest reducing the balance. For federal loans, the Standard Repayment Plan pays the loan off in up to 10 years (10 to 30 years for consolidation loans). Direct Loans disbursed on or after July 1, 2026 use the new Tiered Standard Plan instead, with a fixed payment over 10 to 25 years depending on how much you borrowed; enter your plan's term to match. Private student loans set their own terms and can have fixed or variable rates; this calculator assumes a fixed rate.
If you have several loans at different rates, you can enter the total balance with a weighted average rate for a quick estimate, but paying extra toward the highest-rate loan first saves the most.
What an extra payment does
Any amount you pay above the required payment goes toward principal once current interest is covered, so the balance falls faster and less interest builds up. Federal rules let you prepay all or part of a loan at any time without penalty. If you pay a full monthly amount or more extra, your servicer will normally move your next due date earlier unless you ask otherwise, so if you want to keep paying every month, tell the servicer not to advance the due date.
On the default numbers, an extra $100 a month on a $30,000 loan at 6.52% clears it 2 years 10 months early and saves $3,359.17 in interest.
Income-driven plans and forgiveness
Federal borrowers can also choose income-driven repayment, where the payment is based on income and family size rather than the balance, and any remaining balance may be forgiven after a set number of years. Those plans, and the rules for Public Service Loan Forgiveness, are set by law and regulation and are changing: the One Big Beautiful Bill Act created a new Repayment Assistance Plan, and borrowers who receive a new loan on or after July 1, 2026 lose access to the older IBR, ICR and PAYE plans. Because the rules are in flux, this calculator doesn't model them. Use the Loan Simulator at studentaid.gov to compare the plans you qualify for. If you're working toward forgiveness, paying extra may not save you anything, since the forgiven balance would have been canceled anyway.
The formula
Monthly payment = B × r ÷ (1 − (1 + r)^−n)Each month: interest = balance × r; principal = payment + extra − interest- B = loan balance
- r = annual interest rate ÷ 12, as a decimal
- n = number of monthly payments (10 years = 120)
Example: $30,000 at 6.52% over 10 years
- r = 0.0652 ÷ 12 and n = 120, so the monthly payment is $340.95.
- Over 10 years you repay $40,913.92 in total, of which $10,913.92 is interest.
- Adding $100 a month (paying $440.95) clears the loan in 7 years 2 months, 34 months sooner.
- Total interest drops to $7,554.74, a saving of $3,359.17.
Frequently asked questions
Is it better to pay off student loans early or invest?
It depends on the rate and your situation. Paying off a loan earns a guaranteed return equal to its interest rate. Many people first build an emergency fund and take any employer retirement match, then put extra money toward debts with the highest rates.
Do federal student loans have prepayment penalties?
No. Federal regulations let you prepay all or part of a federal loan at any time without penalty. For a private loan, check your loan agreement.
How is student loan interest calculated?
Federal student loans use simple daily interest: the outstanding principal times the interest rate factor (the annual rate divided by 365.25), times the number of days since your last payment. On a fixed-payment plan, each payment covers all the interest that has built up. Unpaid interest can be capitalized (added to the balance) in some situations, such as on an income-driven plan or when you're not making payments.
Should I refinance federal loans into a private loan?
A lower rate saves interest, but refinancing federal loans into a private loan permanently gives up federal benefits such as income-driven repayment, deferment and forbearance options, and forgiveness programs. Weigh that before you switch.
What about income-driven repayment?
Income-driven plans base the payment on your income and can forgive a remaining balance, but their rules are in flux, so this calculator doesn't estimate them. The Loan Simulator on studentaid.gov uses your actual loans and the current plans.
Sources
Last reviewed for 2026. How we calculate.