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Student Loan Repayment Strategies
The standard federal student loan repayment plan is 10 years with fixed monthly payments. Income-driven repayment plans (SAVE, IBR, PAYE) cap payments at 5-15% of discretionary income and forgive remaining balances after 20-25 years. The trade-off: lower monthly payments but significantly more interest paid over the life of the loan. A $35,000 loan at 5.5% costs $7,900 in interest on the standard plan but $15,000-25,000 on income-driven plans due to the extended timeline.
The most powerful accelerator is extra payments. Adding just $100/month to a $35,000 loan at 5.5% saves $2,800 in interest and cuts 2.5 years off the payoff date. Direct extra payments toward the highest-rate loan first (avalanche method) for maximum interest savings, or toward the smallest balance first (snowball method) for psychological momentum.