How student loan payoff is calculated
Federal and private student loans both accrue simple daily interest on the principal, billed monthly. The standard federal repayment plan amortizes the balance over ten years; extended and graduated plans stretch it further and cost more in total interest.
Enter your combined balance, a weighted average rate across your loans and the years remaining. The calculator returns your payment, payoff date and lifetime interest, plus what any extra amount changes.
If you hold several loans at different rates, running them separately is more accurate — and it shows which one deserves your extra dollars first.
Capitalized interest and why balances grow
Unpaid interest capitalizes — gets added to principal — at certain events such as the end of a deferment, forbearance, or grace period, or when you leave an income-driven plan. After that you pay interest on the interest, which is how balances can rise despite years of payments.
Paying at least the accruing interest during school or deferment prevents capitalization entirely and is often the highest-value dollar you can spend on the loan.
Before you prepay federal loans
Extra payments make sense on private loans and on federal loans you intend to repay in full. They can be counterproductive if you are pursuing Public Service Loan Forgiveness or forgiveness at the end of an income-driven plan, where the goal is minimum qualifying payments and the remaining balance is written off.
Direct extra payments to your highest-rate loan and instruct your servicer not to advance the due date, otherwise the payment may be held as a paid-ahead status rather than reducing principal.
Common mistakes
Using one loan's rate for a whole portfolio, forgetting origination fees on newer federal loans, and refinancing federal loans into private ones without accounting for the loss of income-driven plans, forbearance rights and forgiveness eligibility.