Student-centric advice and objective recommendations
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Student Loan Calculator
Whether you are deciding which type of loan to take out, how much you’re willing to borrow, or figuring out how much you’ll have to repay now that you’re in debt, a student loan calculator can be a very handy tool. Using our simple student loan calculator, we can answer your questions about student loans and help steer you in the direction of other resources.
Enter the details of the loan you’ve taken out or the one you’re considering taking out here for details:
Total principal paid
Total interest paid
Understanding student loan terminology
We get it – student loan terminology can be a bit tricky. To ensure that you feel confident about the data you’re entering into our calculator, we’ve included a glossary of some basic student loan terminology here. If you have questions about a term that isn’t mentioned, check out our full article on student loan definitions.
Interest rates are the chief determinant of how much additional money you’ll end up paying back. If your interest rate is 5%, you’ll end up being charged an additional 5% of your outstanding balance during every year of your repayment.
Student loans typically use the simple interest model, which means that you will only ever be charged interest on your principal balance. In other words, you’ll never accumulate more interest based on the interest you owe. However, some private lenders use compound interest. Beware that under compound interest, you could end up owing interest on your outstanding interest.
Federal loans offer the same interest rates to all borrowers. However, private loan interest rates vary based on the borrower’s credit score. The higher your score, the lower your interest rate will be.
The loan amount is the total sum of money that you borrow from a lender. It does not refer to the amount you’ll pay back, but rather the amount that you borrowed initially. It becomes your principal balance.
The loan term is the period over which you will repay your loan. The typical federal loan term is 10 years, but borrowers can adjust this by changing their repayment plans. Private loans also usually tend to be 10 years but there are exceptions.
If you end up earning a high salary after graduation or come into money, many loan servicers will allow you to pay back your loan early, which will result in less interest paid overall. But if this seems like a possibility for you in the future, make sure to check with your potential servicer about penalties or benefits before signing a deal.
Also see: Paying back student loans early
Private loans are loans offered by private corporations like banks, credit unions, or a state-based organization. These corporations offer loans with the incentive to make money; as a result, their terms are generally less favorable to lenders.
Public loans are issued by the government and usually executed through private corporations. They are not designed with the intent of making money, and usually have lower interest rates and more favorable repayment terms for lenders.
Fixed vs. variable rates
All federal student loans and some private student loans have fixed interest rates. With a fixed interest rate, your initial interest rate will be the same as the rate at the end of your repayment. It will not change at all over the course of the loan.
On the other hand, a variable interest rate fluctuates based on the market and select indexes. So, it will not remain constant throughout the span of your loan. These are less predictable and generally less favorable for borrowers. Only some private loans use variable loans.
If students take out loans with a fixed interest rate and find that rates drop significantly, they can also look into refinancing their loans to secure a lower rate.
Yearly limits for federal loans
Federal loans are typically the best deal for students, but they also have an annual lending limit. Here is the maximum amount you can take out per year in federal loans. Keep in mind this number changes year-by-year, but the changes are typically incremental.
- Direct Subsidized Stafford Loans – $5,500 per year
- Direct Unsubsidized Loans – $12,500 per year
- Direct Unsubsidized Loans – $20,500 per year
- Direct PLUS Loans: You can borrow an amount as high as the school’s reported cost of attendance, minus any other financial aid you’ve earned or received
Parents of students pursuing undergraduate degrees
- Parent PLUS loans: You can borrow an amount as high as the school’s reported cost of attendance, minus any other financial aid your child earned or received
Additional student loan resources
If you’re shopping around for student loans, it’s usually a good idea to look towards federal loans first. They typically have lower interest rates and more flexible repayment terms; you’ll be able to apply for income-driven repayment plans, defer your loans if you go to grad school, and apply for public service loan forgiveness. But many students end up taking out private loans in conjunction with their federal loans
It’s important to keep a discerning eye when it comes to private loans, as some have more favorable terms than others. Private student loan marketplaces are a great way to compare options side-by-side and find the best one for you.
Also see: Navigating different types of student loans
Frequently asked questions about the student loan calculator
Do student loans have compound or simple interest?
All federal student loans have simple interest, which means that they will not accumulate interest on the interest owed. Many private loans also have simple interest, but some have compound interest.
Be sure to check what type of interest your private loan has before signing anything, as this can make a big difference down the line, especially if you have problems paying your loan back.
What is student loan default?
Default is what happens when a borrower fails to make their student loan payments over a period of time. It typically results in severe financial penalties as well as damage to your credit score. Federal loans usually put more tools at students’ disposal to avoid default than private loans, such as income-driven repayment plans.
Also see: Student loan default: what it is and how to avoid it
Can I reduce monthly student loan payments?
Oftentimes, borrowers offer options to reduce your monthly student loan payments. Federal loans are usually more flexible with these options, offering income-drive repayment plans and, in some cases, deferment. Private loans, on the other hand, can be more strict, and if they charge compound interest, these reduced payments will end up costing you more.