The Federal Student Loan Repayment Calculator - Strengths and Limitations

Some student loan calculators are better than others, and it's important to understand their strengths and weaknesses. The Department of Education's repayment estimator, for example, is a sophisticated federal student loan calculator that can give you an idea of the total amount you would repay in any of the government’s student loan repayment programs. But the repayment estimator also has some limitations.

Here’s everything you need to know about the U.S. Department of Education's loan simulator tool and your options for repaying your student loans:

Where the federal student loan calculator is useful

The government offers four income-driven repayment (IDR) programs that base monthly payments on your disposable income and family size. You can use the federal student loan calculator to determine what your monthly payments would be with each repayment plan.

The four IDR plans are:

• Revised Pay As You Earn (REPAYE): This repayment plan is available for any borrower with eligible federal student loans, excluding Parent PLUS loans. With REPAYE, loans will be eligible for forgiveness after 20 years for loans taken out for undergraduate studies and 25 years for loans used for graduate or professional studies. Under this plan, your monthly payment will be limited to 10% of your discretionary income.
• Pay As You Earn (PAYE): To qualify for this repayment plan, you must be able to demonstrate partial financial hardship, meaning your monthly payments (as determined by your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment term. Any remaining loan balance will be forgiven after 20 years, and your monthly payment is limited to 10% of your discretionary income.
• Income-Based Repayment (IBR) Plan: To qualify for the IBR plan, you also must be able to demonstrate partial financial hardship. For borrowers who took out loans on or after July 1, 2014, monthly payments are limited to 10% of your discretionary income, and any unpaid balance will be forgiven after 20 years of payments. For older loans, your monthly payments will be 15% of your discretionary income, and you can qualify for student loan forgiveness after 25 years.
• Income Contingent Repayment (ICR) Plan: This is the only income-driven repayment plan available for Parent PLUS loans. Your monthly payments will be 20% of your discretionary income, and it will take 25 years of payments to qualify for loan forgiveness, or 10 years for borrowers who qualify for Public Service Loan Forgiveness (PSLF).

In addition to the four IDR plans, the Department of Education offers three repayment plans that are not income-driven: Standard, Graduated, and Extended.

• The Standard Repayment Plan is the default payment plan for all federal student loans. Payments are a fixed amount that ensures your loans are paid off within 10 years, or 10 to 30 years for Consolidation Loans.
• The Graduated Repayment Plan is available for all borrowers. Payments begin lower and gradually increase over time, typically every two years. This repayment plan also ensures that your loans are paid off within 10 years (10 to 30 for Consolidation Loans).
• The Extended Repayment Plan is only available to borrowers with more than $30,000 in outstanding Direct Loans. Payments may be fixed or graduated, and must be paid off within 25 years.

The Department of Education also offers a repayment program for older FFEL loans, the Income-Sensitive Repayment Plan. Under this plan, your monthly payments increase or decrease depending on your annual income and are determined by a 10-year repayment period.

The repayment estimator takes into account how different types of loans are handled in each repayment program, and how much of your loan might ultimately be forgiven in an IDR plan.

Limitations of the federal student loan repayment calculator

As good as it is, five factors can throw the U.S. Department of Education’s repayment estimator for a loop in evaluating IDR plans:

• Predicting future income: The federal repayment estimator assumes your income will grow by 5% a year. If it grows by more than that, any projected loan forgiveness could be reduced or eliminated. This could potentially affect your monthly payment and the amount that may be forgiven.
• Predicting tax liability from loan forgiveness: If you qualify for loan forgiveness after making 20 or 25 years of payments on an IDR, the amount forgiven will be taxed at a rate that’s determined by your income tax bracket and the tax rates in place when your outstanding loan debt is forgiven. Note that forgiven student loan amounts aren’t subject to federal income tax if they’re forgiven under the Public Service Loan Forgiveness program, and similar programs that base forgiveness on working a certain number of years in a qualifying profession and for a qualifying employer.
• Evaluating future repayment plans: The federal repayment estimator is most accurate for evaluating the borrower’s first repayment plan. The longer you’ve been in repayment, the less accurate the repayment estimator’s projections will be. FinAid.org offers a suite of student loan calculators that can help you analyze complex scenarios. These calculators will generate amortization tables, which can be useful for analyzing where you’ll be after a few years in a particular plan.
• Additional unpaid interest: The federal repayment estimator does not tell you how much unpaid interest might be added to your loan balance ("interest capitalization") if you leave an IDR plan voluntarily (to refinance, for instance) or fail to recertify your income (an annual requirement of REPAYE).
• Refinancing student loans: The federal repayment estimator does not allow you to see how much you might save by refinancing your student loan debt with a private lender. To see the personalized rates you qualify for from multiple lenders, use Credible.com’s prequalified rate tool. It takes about two minutes and won't affect your credit score.

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Income-driven repayment plans can help borrowers manage tough times by lowering their monthly payment. But since your payments are being spread out over a longer period of time without an interest rate reduction — up to 25 years — your total repayment costs may increase significantly.

If you qualify to refinance at a lower rate, you could not only lower your monthly payment, but reduce the total amount of interest payments you make over the life of your loan.

While refinancing isn’t for everyone — if you refinance government loans, you’ll lose access to IDR programs and the potential to qualify for loan forgiveness — many borrowers decide the savings they can achieve outweigh the value of those federal borrower benefits.

Repaying private student loans

If you’re wondering how long it’ll take to pay off your private student loans, enter your current loan information into the calculator below to find out. Use the slider to see how increasing your payments can change the payoff date.