Student Loan Calculator

Overview of Student Loans in the U.S.

In the United States, student loans are primarily offered by either government programs or private lenders. Most student loan debt comes from federal and state-backed programs, which often include benefits like subsidized interest and flexible repayment terms. Subsidized loans allow students to defer interest payments while in school, making them more affordable than private options. Additionally, federal loans usually have lower interest rates and don’t require a cosigner—just proof of enrollment. Because of these advantages, over 90% of all student debt in the U.S. comes from federal loans.

Before You Borrow – Consider Other Financial Aid

Before turning to student loans, students should explore alternative funding options:

• Grants and Scholarships: These do not need to be repaid and can cover partial or full education costs.

• Work-Study Programs: Offer part-time jobs for students with financial need.

• Personal Savings or Income: Using available funds early can reduce the amount needed in loans.

Loans should be a last resort after maximizing all other available aid sources.

Types of Student Loans

Federal Student Loans

The U.S. Department of Education provides several loan programs with favorable terms:

Direct Subsidized & Unsubsidized Loans (Stafford Loans)

• Subsidized: Based on financial need (EFC), interest is covered while in school and during a 6-month grace period after graduation.

• Unsubsidized: Not need-based. Interest begins accruing immediately upon loan disbursement.

Direct PLUS Loans

Available to graduate students or parents of dependent undergrads. Requires a credit check and can fund the gap between the cost of attendance and other financial aid. These loans have higher interest rates and a 4% origination fee.

Direct Consolidation Loans

Combine multiple federal student loans into one. Benefits include:

• A single monthly payment

• Extended repayment terms

• Access to income-driven plans
  However, consolidation can result in paying more interest over time and may eliminate certain borrower benefits.

State-Based Student Loans

Each state runs its own student loan programs through agencies or nonprofit partners. These vary widely and may include:

• Special forgiveness programs (e.g., for teachers or nurses)

• Requirements to remain in-state after graduation

• Earlier deadlines than federal aid
  Students should check with their state’s higher education office to learn about available aid.

Private Student Loans

Private loans come from banks, credit unions, or lending institutions. Key features include:

• Credit-based approval (often needing a cosigner)

• No subsidy—interest accrues from day one

• Typically higher, sometimes variable, interest rates
  Private loans are often used to cover costs not met by federal aid. Some institutions offer school-sponsored loans with slightly better terms. These loans are not eligible for federal forgiveness programs but can offer:

• Fast approval and funding

• Tax-deductible interest in some cases

• Flexible usage requirements

Student Loan Repayment Plans

Paying back student loans can be difficult, especially for recent grads. Federal loans offer multiple repayment options designed to ease the burden:

Note: Public service employees may qualify for loan forgiveness after 10 years of eligible payments under certain plans. Forgiveness may not be tax-exempt unless specified.

Most borrowers are placed on the Standard Repayment Plan by default. Regardless of the plan, federal and private student loans allow penalty-free early repayment, enabling borrowers to reduce interest costs over time.

Final Thoughts

Choosing the right student loan strategy depends on your financial situation, career goals, and eligibility. Use this Student Loan Calculator to estimate borrowing needs, compare interest rates, and understand repayment plans. Making informed decisions today can help you avoid unnecessary debt tomorrow.