Student Loan Payoff Planner

Student loan debt is one of the most significant financial challenges facing millions of Americans. With the average borrower owing over $30,000, understanding your repayment options can mean the difference between decades of payments and a faster path to financial freedom. This calculator helps you compare different strategies—standard repayment, income-driven plans, and accelerated payoff with extra payments.

The "right" repayment strategy depends on your unique situation: your income, career trajectory, other financial goals, and even your psychological relationship with debt. Some borrowers prioritize the lowest total cost (aggressive payoff); others need lower monthly payments to manage cash flow (income-driven plans). Neither approach is universally "better"—what matters is understanding the trade-offs.

This tool models three approaches: the standard 10-year plan with fixed payments, a simplified income-based model that adjusts payments to your earnings, and accelerated payoff with extra monthly payments. By comparing all three side-by-side, you can see exactly how each affects your payoff timeline, total interest, and monthly budget.

Whether you're a recent graduate planning your first payments, mid-career and reconsidering your strategy, or exploring refinancing options, this planner provides the numbers you need to make an informed decision.

Standard Repayment Plan

The standard plan divides your total balance into fixed monthly payments over 10 years (120 months). Each payment covers interest first, with the remainder reducing principal. This approach results in the lowest total interest because you pay off the loan quickly—but it requires the highest monthly payments.

Example: $35,000 at 6% over 10 years = $389/month, $11,619 total interest.

Income-Driven Repayment (IDR) Plans

Federal income-driven plans (IBR, PAYE, SAVE, ICR) cap payments at a percentage of your discretionary income—typically 10-20%. This lowers payments when income is low but can extend repayment to 20-25 years. After that period, remaining balances may be forgiven (though forgiveness may be taxable).

Note: This calculator uses a simplified income-based model for educational purposes. Actual federal IDR plans have specific eligibility rules, poverty line calculations, and program-specific formulas that may differ from these estimates.

Graduated and Extended Plans

Graduated plans start with lower payments that increase every 2 years. Extended plans stretch repayment to 25 years, reducing monthly amounts but increasing total interest. These options aren't directly modeled here but represent middle-ground approaches.

The Power of Extra Payments

Making extra payments—even small ones—directly reduces your principal. Since interest accrues on the remaining balance, reducing principal faster means less total interest and a shorter payoff timeline. $100 extra monthly on a $35,000 loan at 6% saves ~$4,000 in interest and pays off 3+ years early.

Federal vs. Private Loans

Federal loans offer income-driven plans, forgiveness programs (PSLF), and deferment options. Private loans typically lack these protections but may offer lower rates for excellent credit. This calculator works for both types, but IDR options apply only to federal loans.

Step 1: Enter Your Loan Details

Input each loan's principal balance and interest rate. You can add multiple loans if you have both subsidized and unsubsidized loans, or loans from different years. The calculator will aggregate them for comparison.

Step 2: Set the Standard Term

The default is 10 years (standard federal plan). You can adjust this to see how longer terms affect monthly payments and total interest. Remember: longer terms mean lower payments but more total interest.

Step 3: Add Extra Payment Amount (Optional)

Enter any extra amount you could pay monthly beyond the minimum. Even $50-100 extra makes a significant difference. You can also choose whether to apply extra payments to the highest-rate loan first (avalanche method) or spread them across all loans.

Step 4: Configure Income-Based Settings

Enter your gross annual income, family size, expected income growth, and payment percentage (typically 10% of discretionary income). These settings model a simplified income-driven scenario for comparison purposes.

Step 5: Compare the Results

Click Calculate to see all three scenarios: standard plan, income-based plan, and standard with extra payments. Compare monthly payments, total interest, payoff dates, and total amount paid. Charts visualize how your balance decreases over time.

Step 6: Ask the AI for Personalized Insights

Use the AI assistant to explore specific questions like "Should I pay extra or invest the money?" or "How much faster would $200 extra pay off my loans?"

Standard Payment Formula

Fixed monthly payments use the amortization formula:

Where P = principal, r = monthly rate (APR ÷ 12), n = number of payments. Example: $30,000 at 5.5% for 10 years = $30,000 × [0.00458(1.00458)^120] / [(1.00458)^120 - 1] = $326/month.

Income-Driven Payment Calculation

Simplified model: Payment = (Gross Income × Discretionary %) × Payment % ÷ 12

Example: $50,000 income, 70% discretionary, 10% payment rate = ($50,000 × 0.70 × 0.10) ÷ 12 = $292/month.

Note: Actual federal IDR formulas use specific poverty guideline thresholds that vary by family size and location.

How Extra Payments Reduce Interest

Extra payments go directly to principal. Each dollar reduces future interest:

$100 extra on a 6% loan with 8 years remaining saves roughly $100 × 0.06 × 8 = $48 in interest (simplified). The actual savings compound and are even higher.

Negative Amortization Warning

If your payment is less than monthly interest, your balance grows. Example: $50,000 at 7% accrues $292/month in interest. If your income-based payment is only $200, your balance increases by $92/month. This is why low-income-driven payments can lead to larger balances over time—known as negative amortization.

Scenario 1: Recent Graduate with Entry-Level Salary

Situation: Maya graduated with $45,000 in federal loans at 5.5% average. Her starting salary is $42,000. Standard payment: $488/month.

Analysis: Standard payments take 28% of her net monthly income—tight but manageable. Income-driven: ~$175/month initially (10% of discretionary income), rising with salary over 20 years. Total interest: Standard = $13,560, IDR = ~$28,000+.

Strategy: Maya starts with IDR for cash flow flexibility but commits to increasing payments as her salary grows, treating any raises as "extra" toward loans.

Scenario 2: Mid-Career Professional Considering Aggressive Payoff

Situation: James has $28,000 remaining at 6.8% with 7 years left on standard plan. Current payment: $450/month. He got a raise and can add $300 extra.

Analysis: Standard: 7 years remaining, ~$7,200 more interest. With $300 extra ($750 total): Payoff in 3.5 years, ~$3,200 total interest. Savings: $4,000+ and debt-free 3.5 years sooner.

Strategy: James uses the avalanche method, directing extra payments to his highest-rate loan first for maximum interest savings.

Scenario 3: Public Service Worker Pursuing Forgiveness

Situation: Priya works for a nonprofit with $70,000 in federal loans at 6%. She qualifies for Public Service Loan Forgiveness (PSLF) after 120 payments.

Analysis: Standard 10-year: $777/month, $23,200 interest, no forgiveness. Income-driven at $55,000 salary: ~$288/month initially. After 10 years of payments, remaining balance (~$50,000) forgiven tax-free under PSLF.

Strategy: Priya maximizes IDR to minimize payments while working toward PSLF. Extra payments would actually hurt her—she wants the largest forgiveness amount.

Scenario 4: High Earner Deciding Between Payoff and Investing

Situation: Kevin has $40,000 at 4.5% and earns $120,000. He could pay $1,500/month extra toward loans or invest in his 401(k) with employer match.

Analysis: Aggressive payoff: Debt-free in 2.5 years. But his employer matches 50% of 401(k) contributions up to 6%—that's a guaranteed 50% return vs. 4.5% loan interest savings.

Strategy: Kevin contributes enough to get the full match first (free money), then directs remaining extra to student loans. Math beats emotion here.

Scenario 5: Grad Student with High Balance

Situation: Dr. Chen finished medical residency with $180,000 in loans at 6.5% average. Now earning $220,000 as an attending physician.

Analysis: Standard payment: $2,047/month (affordable at this income). With $2,000 extra ($4,047 total): Payoff in under 4 years vs. 10 years. Interest savings: ~$45,000.

Strategy: Dr. Chen "lives like a resident" for 3-4 years post-training, aggressively paying loans before lifestyle inflation kicks in.

• ❌ Choosing IDR without understanding total cost: Income-driven payments feel affordable, but you may pay 2-3x more total interest over 20-25 years compared to standard repayment. Always calculate total cost, not just monthly payment.
• ❌ Making extra payments without specifying "apply to principal":Some servicers apply extra payments to next month's payment instead of principal. Always specify that extra payments should reduce principal—call your servicer or check your online account settings.
• ❌ Ignoring employer match to pay loans faster: If your employer matches 401(k) contributions, that's often a 50-100% instant return. Unless your loan rate exceeds that, get the match first, then attack loans.
• ❌ Refinancing federal loans without considering trade-offs:Refinancing to a private lender may lower rates but eliminates access to IDR plans, PSLF, and federal forbearance. Only refinance federal loans if you're certain you won't need these protections.
• ❌ Not recertifying income for IDR plans: Federal IDR plans require annual income recertification. Miss it, and your payment may spike to the standard amount. Set calendar reminders and keep documentation ready.
• ❌ Paying minimums when you can afford more: If your income exceeds your needs, extra payments save significant interest. The "I'll pay more later" mindset often means years of unnecessary interest.
• ❌ Assuming forgiveness is guaranteed: PSLF and IDR forgiveness have strict requirements. Thousands of borrowers have been denied due to wrong loan types, wrong repayment plans, or paperwork errors. Verify your eligibility regularly with your servicer.

1. Use the Avalanche Method for Multiple Loans

If you have multiple loans, direct extra payments to the highest interest rate loan first (while making minimums on others). Once that's paid off, roll that payment to the next highest rate. This minimizes total interest paid.

2. Make Biweekly Payments

Paying half your monthly amount every two weeks results in 26 half-payments (13 full payments) per year instead of 12. That extra payment goes entirely to principal, accelerating payoff with minimal budget impact.

3. Apply Windfalls Strategically

Tax refunds, bonuses, and unexpected income can make huge dents in principal. A $3,000 tax refund applied to a $30,000 loan at 6% saves ~$2,500+ in interest and shortens payoff significantly.

4. Optimize for PSLF If Eligible

If you work in public service and qualify for PSLF, maximize forgiveness by staying on an IDR plan with the lowest payments. Paying extra would reduce the amount eventually forgiven—counterproductive for PSLF candidates.

5. Refinance Private Loans Strategically

Private loans don't have federal protections anyway, so refinancing for a lower rate is often smart. Shop multiple lenders—rate differences of 0.5-1% save thousands. Consider variable rates only if you'll pay off quickly.

6. Treat Raises as Loan Payments

When you get a raise, commit the increase to student loans before lifestyle inflation absorbs it. A $200/month raise directed to loans for 3 years could save $5,000+ in interest and years of payments.

7. Consider Employer Student Loan Repayment Benefits

Some employers offer student loan repayment assistance (SLRA) as a benefit— typically $50-200/month toward your loans. Ask HR about available programs. This is essentially free extra payments toward your balance.