Student Loan Simulator Calculator

Loan Payment Formulas:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \] \[ \text{or} \] \[ \text{Income} \times \text{percentage} \]

Principal Amount (P):

USD

Annual Interest Rate:

Loan Term:

years

Repayment Plan:

Annual Income:

USD

Monthly Payment (PMT):

Total Interest:

Total Payment:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Student Loan Simulator?

The Student Loan Simulator calculates monthly payments under different repayment plans (standard, income-driven, extended) for federal student loans. It helps borrowers understand their repayment options and financial commitments.

2. How Does the Calculator Work?

The calculator uses two main formulas:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \] \[ \text{or} \] \[ \text{Income} \times \text{percentage} \]

Where:

\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (decimal)
\( n \) — Number of months (unitless)
\( Income \) — Annual income (USD)
\( percentage \) — IDR percentage (decimal)
\( PMT \) — Monthly payment (USD)

Explanation: The standard formula calculates fixed monthly payments, while the income-driven formula bases payments on discretionary income.

3. Understanding Repayment Plans

Standard Plan: Fixed payments over 10 years (120 payments).
Income-Driven Plan (IDR): Payments are 10-20% of discretionary income, with possible loan forgiveness after 20-25 years.
Extended Plan: Fixed or graduated payments over 25 years (300 payments).

4. Using the Calculator

Tips: Enter principal amount, interest rate (5.50% for 2025 federal unsubsidized loans), loan term, and select repayment plan. For IDR, enter your annual income.

5. Frequently Asked Questions (FAQ)

Q1: What's the current federal student loan interest rate?
A: For 2025, the rate is 5.50% for undergraduate unsubsidized loans (rates vary by loan type and year).

Q2: How is discretionary income calculated for IDR?
A: Typically 10-20% of income above 150% of the poverty guideline for your family size and state.

Q3: Are there loan forgiveness options?
A: Yes, Public Service Loan Forgiveness (PSLF) after 120 qualifying payments, or IDR forgiveness after 20-25 years.

Q4: Should I choose standard or income-driven repayment?
A: Standard pays off loans fastest with least interest. IDR may be better if payments would exceed 10% of income.

Q5: Can I change repayment plans later?
A: Yes, you can switch plans, but this may affect total interest paid and forgiveness timelines.