Student Loan Calculator

The student loan calculator is a simple tool to help you estimate key aspects of your student loan, such as loan balance, monthly payments, interest rate, and remaining term. By inputting at least three values, the calculator automatically determines the fourth, along with your total interest and total amount paid.

Through the following sections, you can read about government student loans (or federal student loans), for example, the Federal Perkins Loan Program, and we show you its advantages compared to private student loans. Also, you can read some advice on how to apply for a student loan and how to get a student loan for college, and you can learn what student loan deferment is and answer the question, "How do student loans work?"

If you're looking for a more complex tool or want to estimate the time it will take to pay back your student loan, check out our student loan payment calculator and student loan repayment calculator.

Student loans are a form of financial aid used to help students access higher education, such as an undergraduate or a graduate/professional program. The essential difference between this kind of academic financial support, compared to scholarships or grants, is that student loans, in general, must be repaid. For this reason, it is crucial to conduct a thorough review and analysis before taking out such a financial commitment.

As for the rationale behind the borrowing, student loans are comparable to mortgage loans in that they are generally considered "good debt". On the one hand, both liabilities involve considerable amounts of debt that take an extended time to repay. On the other hand, their interest rates are relatively low compared to those of an auto loan or credit card, and they keep their value for a longer period.

A student loan can be considered an investment because, with the knowledge and certificate acquired, you will be able to earn a higher income in the future.

Probably the best way to demonstrate how student loans work is to outline the differences between them and regular loans. In the following, we indicate a few key distinctions.

The course of the loan

The most essential feature that distinguishes a student loan from other loans is that, in principle, the borrower doesn't begin to repay the debt as soon as they receive the loan. The lifetime of a typical student loan consists of three main stages, listed below. You may encounter these terms while using our student loan calculator.

1. In-school period

   This interval begins when you receive the loan, that is, at the time of disbursement. Generally, the loan disbursement follows the schedule of your college tuition due dates. Although, in general, you don't need to make any repayments during this period, you may consider repaying the accrued interest on the outstanding balance. Paying back the accumulated interest before its capitalization results in a lower charged interest and reduces the monthly installment.

2. Grace period

   The grace period refers to the delay in paying back the loan allowed by your lender. During this time, you can settle your financial circumstances and get prepared for the payback period. Note, that during this time, interest is accumulating similarly as during the in-school period, so it might be a good idea to pay at least the accrued interest to avoid capitalization. Typically, the grace period ranges from 6 to 12 months.

3. Payback period

   From this time on, you must repay the loan on a monthly basis in calculated installments. In this calculator, we follow the most common repayment option, which is identical to the process of an amortization loan. Note that there are other types of repayment options; if you would like to review other possibilities, you can check the student loan repayment calculator, mentioned at the top of this page, which focuses more on this subject. The payback period is usually at least 10 years and may reach 30 years.

Interest rate

Unlike other forms of debt, such as credit cards and mortgages, direct loans are daily interest loans, which means that interest accrues (accumulates) daily. Depending on whether your loans are subsidized or unsubsidized, you may or may not be responsible for paying the interest that accrues during all periods.

As we mentioned, student loan interest rates are usually lower than other rates, such as personal loan rates. Besides, the government often intervenes, directly or indirectly, in the credit market to regulate rates and fees to reduce the burden on students. Still, there are further elements to consider.

Since, in contrast to regular loans, the disbursement of the credit typically happens several years before the repayment period, the timing of interest accumulation and capitalization are of great importance.

In general, the interest is accrued on a daily basis. However, it is not added to your loan balance until the end of the loan deferment period.

But what is student loan deferment? Deferring your interest simply means that while the accrued interest is accumulating every day, it is added (capitalized) to the payable principal only after your graduation.

More specifically, the following situations also mean interest capitalization:

• End of the grace period;
• End of loan deferment;
• After a period of forbearance; and
• At the time of federal loan consolidation.

Using the student loan calculator is quick and straightforward. It’s designed to help you understand your loan better and calculate key repayment details, but if you're looking for a more complex tool, check out our loan repayment calculator

Input at least three out of four values:

• Loan balance — The amount of loan you still owe.
• Remaining term — The time left to repay your loan, expressed in years and months.
• Interest rate — The annual interest rate applied to your loan.
• Monthly payment — The amount you pay toward your loan every month.

The student loan calculator will automatically determine the fourth value based on your inputs and provide additional insights, such as the total interest you’ll pay and the total amount you’ll pay over the loan term.

Example 1: Finding your monthly payment

Imagine you have a loan balance of $10,000, an interest rate of 5%, and a remaining term of 5 years. You want to know how much you’ll need to pay each month to stay on track with your repayment schedule.

Input:

Loan balance: $10,000
Remaining term: 5 years 0 months
Interest rate: 5%

Outcome: The calculator determines that your monthly payment will be approximately $188.71.

Example 2: Finding your loan balance

You’re making monthly payments of $300, your loan has an interest rate of 6%, and your remaining term is 4 years. You’re unsure how much is left to repay and want to know your current loan balance.

Input:

Remaining term: 4 years 0 months
Interest rate: 6%
Monthly payment: $300

Outcome: The calculator estimates your loan balance is approximately $12,774.

Why might you need this? If you’re considering making a lump-sum payment to pay off your loan early or refinancing your loan for better terms, knowing your current loan balance can be very important.

The essential difference between federal and private student loans is that federal student loans are funded by the government, while private student loans are provided by the private sector. For this reason, the two types of loans have very different financial structures with respect to the offered benefits, interest rates, and repayment options.

In general, federal student loans are more beneficial, since governments often support students by various policies and benefits to ease the burden of those youths in higher education. Still, some advantages may make private student loans more attractive, for example, their higher flexibility.

The table below summarizes the main differences between the two loan types.

Interest rates

One of the most crucial factors to take into consideration when applying for a student loan is the applied interest rate. Typically, federal student loans offer fixed interest rates, which is 4.45% on average for undergraduates and a slightly higher 6% for graduate programs. In contrast, private student loans mostly have a variable interest rate of 7.99%, which fluctuates according to the current economic and market conditions.

Interest subsidization

Some of the Federal Direct Student Loan Program offers are subsidized loans that can significantly reduce the cost of the loan and, therefore, your monthly payments. For this reason, these loans, called Federal Direct Subsidized Student Loans, are one of the best student loans you can get. Some essential features are the following:

• Available to undergraduate students who have demonstrated financial need;
• The amount you can borrow is determined by your school;
• The loan amount will not exceed your financial need; and
• The US Department of Education will pay the interest on your loan if you do not drop out before you have completed half of your course, during the first six months after you leave school (the grace period), and/or during an approved deferment.

Loan forgiveness

Loan forgiveness is where the student loan debt doesn't need to be repaid. In the US, such relief is mostly associated with the Public Service Loan Forgiveness (PSLF) program. Still, you may check the detailed list of conditions on the Debt Help Organization website.

One characteristic feature of being mature is to make mindful financial decisions. A considerable part of those taking a higher education loan are experiencing this challenge for the first time. And, for the majority, taking out a student loan is the only way to finance their tuition or other expenses during this time.

Because of the high stakes — going into considerable debt with the hopes of acquiring a sufficient degree and qualifications to make repaying the loan easier in the future — finding the best student loan is crucial. Therefore, as the first step, you need to thoroughly review all possible options — and their detailed features — before making a decision.

After making up your mind, there are particular application processes to follow, depending on which type of student loan you are looking for.

To apply for a federal student loan, you must complete a Free Application for Federal Student Aid (FAFSA) form at FAFSA.gov. After filling it out, you must submit it to the FAFSA to be eligible for a federal student loan.

There are a few practical things to keep in mind:

• There is no fee for the submission;
• The FAFSA needs to be completed every year when you need money; and
• The earlier, the better (as soon after the 1st of October as possible) since some grants are awarded on a first-come, first-served basis.

After submission, you will receive a financial aid offer that tells you how much federal student loan you're eligible for. After approving the offer, you can make a follow-up in the National Student Loan Data System (NSLDS), which provides a comprehensive view of loans and grants during their complete life cycle.

As for the private student loans, you need to find the lender directly and apply it according to their protocol. You may check different private loan options on finaid.org, where you can find more information on this topic as well.

In general, you need to take the following steps:

1. Go through their website carefully.
2. Check the interest rate of the loan, along with its flexibility of repayment options and other benefits.
3. Apply directly on their website.
4. You can add a co-signer that may improve your chances of getting the loan.
5. The lender will check your (or the co-signer's) credit score and let you know their decision.

The results of the student loan calculator should be considered as a close approximation financially. All monthly payment figures, loan balances, and interest figures are estimates based on the data you provided in the specifications, which, despite our best efforts, are possibly not exhaustive.

For this reason, and also because of other potential shortcomings (varying interest rates, your payment habits, type of loan), the calculator is created for instructional purposes only. Yet, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.