MONEY REALITY · STUDENT LOAN AMORTIZATION

The Student Loan You Now Own

Federal vs private. Standard vs IBR/SAVE/PAYE income-driven plans. Total interest over the life of the loan. The decision tree most graduates never see in writing.

The loan does not care what you intended. It cares about the payment schedule. Run the schedule before the first payment is due.

Your loan

Total loan balance ($)

Sum across all your federal + private loans at graduation.

Weighted average interest rate (%)

2026 federal undergrad: 6.53%. Federal grad: 8.08%. Federal PLUS: 9.08%. Private: 7–14% depending on credit.

Annual income at graduation ($)

Used to estimate IBR/SAVE payments (10–20% of discretionary income).

Family size

Used for the federal poverty line baseline.

Extra monthly payment ($)

Optional. Even $50/mo extra cuts years off a 10-year plan.

Four scenarios, compared

The lowest monthly payment is rarely the lowest total cost. The income-driven plans (SAVE, PAYE, IBR) keep the payments manageable while you build career earnings — but they pay more interest over the life of the loan unless you qualify for forgiveness (PSLF after 120 qualifying payments, or 20–25 years for income-driven). Match the plan to the strategy, not the comfort.

From the Money Reality College Edition + First Job Edition. Ch 11 (College Edition) and Ch 11 (First Job Edition) both cover the post-graduation loan-payment decision. This tool runs the math on your specific balance and rate.

Illustrative only. Federal rates and IBR/SAVE/PAYE formulas change annually (Department of Education); 2026 rates and the 2024 SAVE-plan-as-implemented are used here. Private-loan terms vary by lender. Not financial advice; if you have a federal loan, your servicer can run the same scenarios on your actual loan record.

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