How student loan payments are calculated
Most student loans are repaid with fixed monthly payments that cover the interest owed that month plus a slice of the principal. Early payments are mostly interest; later payments are mostly principal.
where r is the monthly rate (annual rate ÷ 12) and n is the number of months. A $35,000 balance at 6.5% over 10 years costs about $397 a month and roughly $12,700 in total interest.
How the term changes the cost
| Term | Monthly payment | Total interest |
|---|---|---|
| 10 years | $397 | $12,690 |
| 15 years | $305 | $19,880 |
| 20 years | $261 | $27,630 |
| 25 years | $236 | $35,900 |
$35,000 at 6.5%. Stretching the term lowers the payment but can nearly triple the interest.
Federal repayment plans
Federal loans offer fixed plans (like the 10-year standard plan used here) and income-driven plans where payments are a share of your discretionary income and any remaining balance may be forgiven after many years. Plan names and rules have changed several times recently, so use the official Loan Simulator at StudentAid.gov for income-driven estimates based on your actual federal loans.
How much of my income should go to student loans?
Many financial planners suggest keeping student loan payments under 10% of gross income. Above 15%, it becomes hard to save for emergencies and retirement at the same time, and an income-driven plan or a longer term may be worth considering.
Frequently asked questions
How is interest charged on student loans?
What's the standard repayment term?
Do I have to start paying right after graduation?
Last reviewed: 2026-10-09