Estimate your monthly payment, total interest, and see how extra payments can save you thousands.
Student loans are installment loans designed to cover education costs including tuition, room and board, books, and other expenses. Federal student loans offer fixed interest rates set by Congress each year, while private student loans may have fixed or variable rates set by the lender. Most federal loans come with a 6-month grace period after graduation before payments begin, but interest may still accrue during this time on unsubsidized loans.
Monthly payments use the standard amortization formula: M = P × r × (1 + r)n / [(1 + r)n – 1], where P is your total loan balance (including any capitalized grace period interest), r is the monthly interest rate, and n is the total number of monthly payments in your repayment plan.
For $35,000 in student loans at 5.5% APR on the standard 10-year plan:
| Plan | Term | Monthly Payment | Best For |
|---|---|---|---|
| Standard | 10 years | Fixed | Lowest total cost |
| Extended | Up to 25 years | Fixed or graduated | Lower monthly payments (higher total cost) |
| Graduated | 10 years | Starts low, increases every 2 years | Expect rising income |
| SAVE/IBR/PAYE | 20-25 years | Based on income (10-15% of discretionary) | Low income relative to debt |
The standard repayment plan has fixed monthly payments over 10 years (120 months). It typically results in the lowest total interest cost among all federal repayment plans because you pay off the loan faster. Most borrowers default to this plan unless they choose an alternative.
If you can afford it, making interest payments during the grace period prevents interest from capitalizing (being added to your principal balance). On a $35,000 loan at 5.5%, skipping the 6-month grace period adds roughly $962 to your balance — and you pay interest on that extra amount for the life of the loan.
Extra payments go directly toward your principal balance, reducing the amount future interest is calculated on. Even an extra $50/month on a $35,000 loan at 5.5% can save you over $1,400 in interest and pay off the loan 14 months early. Always confirm with your servicer that extra payments are applied to principal, not future payments.
With subsidized loans, the government pays the interest while you are in school, during grace periods, and during deferment. With unsubsidized loans, interest accrues from the day the loan is disbursed and capitalizes if not paid, increasing your total balance. Unsubsidized loans cost more overall.
Refinancing makes sense when you can get a significantly lower interest rate (usually 1%+ lower), have stable income, and do not need federal loan protections like income-driven repayment or Public Service Loan Forgiveness. Be aware that refinancing federal loans into a private loan eliminates all federal benefits permanently.