Student Loan Calculator

How to Use the Student Loan Calculator

Federal vs Private Student Loans: Critical Differences

Federal student loans offer borrower protections unavailable on private loans: income-driven repayment (IDR), deferment, forbearance, and potential forgiveness including Public Service Loan Forgiveness (PSLF — full forgiveness after 10 years of qualifying public sector employment). Federal Direct Subsidised loans do not accrue interest while enrolled at least half-time. Unsubsidised loans accrue from disbursement — if unpaid during school, this interest capitalises onto the principal, increasing the amount borrowed before repayment even begins.

Income-Driven Repayment: Who Benefits Most

Federal IDR plans (SAVE, PAYE, IBR) cap monthly payments at 5–20% of discretionary income and forgive balances after 10–25 years of qualifying payments. IDR is most valuable for borrowers with high debt relative to income — particularly those in public service careers where PSLF provides forgiveness after just 10 years. For high-income earners who can afford standard payments, the extended IDR timeline often results in higher total interest paid than standard 10-year repayment. Compare total lifetime cost across plans before selecting — the monthly payment difference can be misleading about overall cost.

Refinancing: When It Makes Sense (and When It Doesn't)

Refinancing federal loans into a private loan permanently eliminates federal protections — IDR eligibility, PSLF qualification, deferment rights. For borrowers in public service or with high debt-to-income ratios, this is rarely advisable. For private loan holders or those with stable high incomes and no interest in federal forgiveness programmes, refinancing to a lower rate can save significant money. A $40,000 private loan refinanced from 8.5% to 5.5% saves approximately $7,200 in interest over 10 years — substantial for those who qualify for prime rates.

Making the Most of Your Grace Period

Most federal student loans provide a 6-month grace period after graduation before repayment begins. Rather than ignoring this window, use it strategically: make interest-only payments during the grace period to prevent capitalisation on unsubsidised loans, research and enrol in your chosen repayment plan before the first payment is due, and build one month of emergency fund before starting full repayments. Starting repayment 30 days prepared is significantly better than starting 30 days behind.