How this instrument works
A student loan is repaid the same amortizing way as a car loan or a mortgage — a fixed monthly installment sized so a growing share goes to principal and a shrinking share to interest until the balance hits zero on the final month — but nothing backs it. There is no car or house a lender can repossess, so the contract leans entirely on the borrower's income and, for federal loans, on collection tools like wage garnishment and tax-refund offset that ordinary consumer loans do not carry.
Federal loans default to the Standard Repayment Plan the moment a borrower stops actively choosing something else: a fixed payment sized to clear the balance in exactly 120 months, the same 10-year term behind the worked example on this page. Two other federal families behave nothing like this formula — graduated plans that start low and step up every two years, and income-driven plans that size the payment off discretionary income and household size rather than off the loan balance at all, sometimes for less than the interest accruing that month.
This sheet prices the fixed, amortizing case only — enter any balance, rate, and term and it returns the payment, total paid, and total interest exactly, the same arithmetic a federal Standard or Extended plan, or most private lenders, actually use. It has nothing to say about an income-driven payment, which a servicer recalculates yearly from a tax return, and it assumes no interest already capitalized onto the balance from an earlier deferment or forbearance period.
- Enter what you currently owe under Student loan balance, $ — the outstanding principal, not the original amount borrowed if payments have already been made.
- Set the rate on the promissory note under Annual interest rate, % — federal loan rates are fixed for the life of the loan and published yearly by the Department of Education.
- Choose the payoff length under Repayment term, months; 120 is the federal Standard Plan's 10 years, and higher values model an Extended or Graduated plan instead.
- Read Monthly payment for the fixed installment that term produces, then check Total of all payments and Total interest paid for the full cost of the loan.
Worked example — $30,000 at 6% over the standard 10-year term
Borrow $30,000 (Student loan balance, $ set to 30000) at 6% (Annual interest rate, % set to 6) over the federal Standard Plan's 120 months. The monthly rate works out to 0.5%, and the formula returns Monthly payment = $333.06 — the figure a servicer's own amortization table would show for the same three inputs, to the cent.
Across all 120 payments that is Total of all payments = $39,967.38, of which Total interest paid = $9,967.38, roughly a third of the original balance. Stretch Repayment term, months to 240, modeling a 20-year Extended Plan on the same $30,000 at 6%, and the payment falls to $214.93 while total interest rises to $21,583.04 — more than double the 10-year figure for a loan that is otherwise identical.
Questions
Why is my loan servicer's bill different from what this calculator shows?
Most servicers do not bill the fixed amortizing payment this sheet computes. On an income-driven plan, the servicer sets the payment from discretionary income and family size, recalculated yearly from a tax return, and it can sit below or above the number here. This instrument only prices the fixed Standard or Extended plan math — enter the term an income-driven statement implies to compare the two.
What is capitalized interest, and does this sheet account for it?
No — this sheet assumes payments start the month the loan is disbursed, with no interest already added to the balance. Capitalization happens when unpaid interest from a deferment, forbearance, or a lapsed income-driven recertification gets rolled into principal, so future interest is charged on interest. Add any capitalized amount to Student loan balance, $ first to see its real cost.
Standard 10-year plan or a longer Extended plan — what is the real trade?
A longer term lowers the monthly payment but keeps the balance outstanding, and accruing interest, for more months. Stretching the $30,000 example from 120 to 240 months at 6% drops the payment from $333.06 to $214.93, yet total interest more than doubles, from $9,967.38 to $21,583.04, for an otherwise identical loan.
Does this formula work for private student loans too?
Yes, for the fixed-rate, fixed-term portion of a private loan — the amortization math is identical to a federal Standard Plan. It will not model a private loan's variable rate, which can change the payment mid-term, or federal-only protections such as income-driven repayment, deferment, and forgiveness that private lenders are not required to offer.
Why does the Standard Plan use exactly 120 months?
Because that is the term the Department of Education set for the federal Standard Repayment Plan — 10 years, unless an unusually large balance qualifies a borrower for a longer standard schedule. It is also the plan borrowers land in automatically after leaving school unless they actively pick a Graduated, Extended, or income-driven alternative instead.
References
- Consumer Financial Protection Bureau — Student loans resources
- Federal Student Aid — Repayment plans for federal loans
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.