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Student Loan Calculator

Created by Tibor Pál, PhD candidate
Reviewed by Dominik Czernia, PhD and Jack Bowater
Last updated: Aug 15, 2023

The student loan calculator is an advanced device that allows you to create a comprehensive review of your degree's funding plan, from when you file the loan application until you're finally done paying off the debt. This tool is so specific you can use the student loan calculator to assess your in-school expenses, and make a financial projection for the payback period.

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 bits of advice on how to apply for a student loan, 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?"

Besides, you can also find out about student loan forgiveness programs and national student loan data systems. By employing this calculator with the data of a few loans you are eying, we can hopefully help you select the best student loan for your needs.

In case you want to estimate how long it will take to pay back your student loan, check out our student loan payment calculator and student loan repayment calculator.

What is a student loan?

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 transaction.

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, their interest rates are relatively low - compared to an auto loan or credit card, and they keep their value for a more extended period. In some way, a student loan can be considered as an investment, since with the acquired knowledge and certificate, you will be able to reach higher income in the future.

How do student loans work?

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

The course of the loan

The most essential feature that distinguishes a student loans 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.

  1. 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.

  1. 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.

Also, as we mentioned, student loan interest rates are usually lower than other rates, for example, personal loan rates. Besides, the government often intervenes, directly or indirectly, on the credit market to regulate the 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 its 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.

Federal student loans vs. private student loans

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

Loan type

Federal student loans

Private student loans

FAFSA¹ required to apply



Borrowing limit determined by FAFSA¹



Interest rate fluctuation


Mostly variable

Credit score consideration



Interest subsidization



Income driven repayment plan



Allows change in repayment plan after borrowing



Loan forgiveness



¹FAFSA - Free Application for Federal Student Aid

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 graduates programs. In contrast, private student loans mostly have a variable interest rate of 7.99%, that 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 relieves are 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.

How to apply for a student loan - how to get a student loan?

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 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, where you can find more information on this topic as well.

In general, you need to take the following steps:

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

How to use the student loans calculator?

To employ the calculator, you need to specify the following parameters.

  • Planned program(s)

As the first step, you should set your planned educational program, which will be the base of your projection. Higher education programs typically breaks down to undergraduate and graduate schools. While undergraduate courses award an associate's degree or bachelor's degree, graduate schools provide advanced academic degrees, such as master's or doctoral degrees. The general requirement to be eligible to apply for a graduate course is a previously earned undergraduate degree. In this calculator, you can choose each program solely, but you can set a complete higher education plan as well.

Tuition and fees

In this section, you can specify the tuition that you are planning to finance with a student loan.

  • Tuition payment plan

In general, there are two types of tuition payment plans: locked, or fixed-rate tuition and variable rate tuition. While the fixed-rate tuition plan offers stable tuitions over the course's entirety, the variable rate tuition might fluctuate according to the given year's financial and economic situation. Due to the recent fluctuation in tuition costs, the popularity of fixed-rate tuition is increasing. However, it is worth mentioning that the trend of higher education expenses can take a downward direction as well, for example, in an economic downturn. Therefore, your choice might depend on the available option offered by the academic institute, the economic outlook, and your risk tolerance.

  • Duration of the program in years

You can set the length of the chosen program here.

  • Yearly tuition

Depending on the tuition payment plan, you can set a fixed yearly tuition payment, or individual tuition payments for each year.

  • Number of payments in an academic year and payment deadlines

The number of yearly tuition installments can range from one to three, depending on the higher educational school. Note, that the payment deadlines refer to the payment due dates in the first year of studies, and apply to the rest of the academic years as well. They also coincide with the student loan disbursements.

Loan specification

In this section, you can specify the structure of your student loan.

  • Interest subsidization

When you set the interest subsidization, the interest is not accumulated during the in-school period and the grace period if applicable.

  • Expected graduation date

You can set the exact date of graduation in the expected year that coincides with the end of the student enrollment here. Note, that if there is no grace period, the loan repayment begins the following month.

  • Grace period

It is the interval between graduating and repaying your loan. Note, that in case of no interest subsidization, the interest is still accruing until the end of the grace period, when its capitalized into the principal balance. For most federal student loan types, after you graduate, leave school, or drop before completing half of your course, you have a six-month grace period (sometimes nine months for Perkins Loans) before you have to start repaying the loan. This grace period gives you time to arrange your financial circumstances and to choose your repayment plan.

  • Interest rate

The interest rate can be fixed or variable. To keep things simpler, student loan calculator applies fixed-rate interest. Interest is calculated as a percentage of the unpaid principal amount.

  • In-school interest prepayment and Grace period interest prepayment

One effective way to reduce monthly payment and save some money on the interest expenses is to repay the incurred interests before its capitalization that occurs when you graduate or when your grace period ends. You can study its effect on your figures in the payment summary.

  • Interest capitalization

Interest capitalization takes place when the accumulated interest is added to the loan principal. In the US, it typically happens right before the payback period (at the time of graduation and at the end of the grace period). During the loan repayment, the interest is capitalized on a monthly basis.

  • Payback period

The time over which the loan needs to be paid off. It usually ranges between 10 and 30 years. It's worth noting that you may reduce the monthly payment by extending the payback period; however, the longer the payback period, the higher the total interest paid.

After setting all the necessary variables, you can study the results through the following three sections.

Payment summary

In this section, you can review the estimation results and analyze your loan from multiple angles.

  • Total amount of student loan to be repaid, and its components (tuition and deferred interest)

Note that in case of any deferred interest, the principal of your loan at the beginning of the payback period will be equal to the the total sum of money borrowed plus any interest that has been capitalized.

  • Monthly payment

The composition of monthly payments in a given month or year can be further analyzed in the repayment schedule section.

  • Total payment

Your total payment when you pay off the loan will be equal to the disbursed credit with any deferred interest, plus the charged interest during the payback period.

  • Total interest payment

The total interest charged is equal to the sum of in-school interest accumulation, the interest accrued during the grace period, and the interest charged during repayment.

As well as the factors mentioned above, you can also check by how much you can reduce the monthly payment by, and what your interest saving is if you prepay your interest before capitalization (during school time, in the grace period, or both).


You can follow up on your balances through three different dynamic graphs. You can set the following representations:

  • full-length balances

This represents the annual balances through the whole lifetime of the loan, beginning from its disbursement until it is entirely paid off.

Balance with total interest: the figure shows the balance that needs to be repaid. It is the sum of the disbursed loans (tuition) and any interest liability incurred during a given year.

Outstanding loan balance: this value shows the unpaid balance of the loan.

Total paid: this figure represents the sum of total payments at the end of a given year.

Interest liability: it is the sum of all interest obligation occurring in a given year.

  • in-school balances

The graph gives you insight into the monthly balances throughout the in-school period and the grace period (if applicable).

Loan balance with deferred interest: the figure represents the amount that will form the principal of the student loan from the beginning of the payback period.

Received loan: it corresponds to the loan received for the tuition fee.

Interest Liability: it shows the incurring interest liability in a given month that is either repaid before the payback period or deferred until its capitalization.

  • loan breakdown

The pie chart demonstrates the proportion of the principal amount (tuition), the interest obligation during school time, interest incurred during the grace period, and interest accumulated during the payback period in relation to the total payment.

Repayment schedules

In this section, you can review the amortization schedule of your loan on a monthly and yearly basis. You can check what part of your monthly payment is devoted to interest and how much channeled to the principal, which is the base of the following month's interest computation. Besides, in the annual schedule, you can learn how much you need to pay in a given year.


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 that are, despite our best effort, 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, in case you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.

Tibor Pál, PhD candidate
Planned program(s)
undergraduate only
Tuition and fees - Undergraduate program
Tuition payment plan
Locked (Fixed) Rate Tuition
Duration of program in years
Yearly tuition
Number of payments in academic year
First payment on
Second payment on
Loan specification
Expected graduation date
Grace period
Interest rate
Interest subsidization
Interest prepayment
no prepayment - deferred
Interest capitalization
monthly (US)
Payback period
Payment summary
The total amount of student loan with charged interest to be repaid after your graduation is $22,649.19, which consists of a principal of $20,000, and $2,649.19 of accumulated interest before you start paying off the loan.
During the loan repayment, you will need to pay $234.73 each month.
The total payment with all interest charged will be $28,167.92.
The total interest payment will be $8,167.92, which includes $5,518.72 in interest, charged while paying off the loan.
full-length balances
Repayment schedules
yearly schedule
YearYearly PaymentYearly PrincipalYearly InterestClosing Balance
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