How Student Loan Payments Work: Plans, Interest and Extra Payments

Published October 12, 2026

Free tool: Student Loan Calculator→

Student loans follow the same math as other loans, with a few twists: interest often builds up while you're in school, you can choose between repayment plans, and the choice can change your total cost by tens of thousands of dollars. This guide explains the common plans, what happens to interest before repayment and how much extra payments save, using the free Student Loan Calculator.

The standard plan

The traditional standard plan repays the loan in equal monthly payments over 10 years. For $30,000 at 6.5%:

• Monthly payment: $340.64
• Total interest: about $10,877

It's usually the cheapest plan overall, because you repay the loan fastest.

Extended and graduated plans

• Extended (25 years): the payment drops to $202.56, but the total interest rises to about $30,769, nearly three times as much.
• Graduated: payments start lower and rise every two years, still finishing in 10 years. They're easier when your salary is low, but cost more interest than the standard plan. The calculator estimates payments that rise 25% every two years; your servicer's exact amounts may differ.

Choose a longer plan only if you need the lower payment, and pay extra when you can.

Interest before repayment

Unsubsidized federal loans and most private loans start charging interest as soon as the money is paid out, even while you're in school. On $30,000 at 6.5%, six months adds $975. If that unpaid interest is added to the balance when repayment starts (called capitalization), you then pay interest on the interest. Whether and when that happens depends on the loan, so check with your lender or servicer. Paying the interest as it builds up, even in small amounts, avoids it either way.

How much extra payments save

Extra payments go straight to principal once the month's interest is covered. Adding $100 a month to the $30,000 standard loan:

• pays it off in 86 months instead of 120, almost three years sooner, and
• saves about $3,347 in interest.

Ask your servicer to apply extra payments to principal rather than to future payments.

What the calculator doesn't cover

Income-driven repayment plans base payments on your income and family size and can end in forgiveness after many years; the calculator doesn't model them. US federal rules are also changing: new federal loans made from July 1, 2026 come with fewer plans, including a standard plan whose term depends on how much you borrowed. For federal loans, check the plans open to you with the official Loan Simulator on StudentAid.gov, and use the Custom term option here to model a different term.

How to use the Student Loan Calculator

1. Open the Student Loan Calculator.
2. Enter the loan balance and the interest rate.
3. Choose a repayment plan: standard (10 years), graduated (10 years, rising payments), extended (25 years) or a custom term.
4. Add an extra monthly payment if you plan one.
5. If you're still in school or in a grace period, enter the months until repayment. Then tick Interest builds up before repayment if your loan accrues interest, and choose whether that interest is added to the balance or paid off first.
6. Read the results: the monthly payment, the total interest (including any that built up before repayment), the total repaid, the time to pay off and what extra payments save, with a balance chart comparing your plan with no extra payments and with the standard plan, a principal-vs-interest breakdown and a yearly balance table.

Frequently asked questions

How is a student loan payment calculated?

Like any amortizing loan: the balance, the monthly rate and the number of payments determine a level payment. $30,000 at 6.5% over 10 years is $340.64 a month.

Is it better to choose a longer repayment plan?

Only if you need a lower payment. A 25-year plan cuts the payment but can nearly triple the total interest.

Should I pay interest while I'm in school?

If you can, yes. You'll start repayment owing only what you borrowed, and if your loan adds unpaid interest to the balance, you avoid paying interest on that interest.