Student Loan Payoff
How many months a student loan takes to clear at a fixed payment, and what the interest adds.
Recent
Formula
How the calculation works
A fixed payment on an amortising loan has no clean formula for the number of months, so the tool works month by month: interest is charged on the balance, then the payment is applied. That is the order lenders use, and it is why the early months move the balance so little.
On 30,000 at 5% paid at 400 a month the loan clears in 91 months and costs 6,046 in interest -- a fifth of the original balance, paid purely for the time taken. Raising the payment attacks that directly, because every extra unit goes to the principal.
Common mistakes
- Choosing the longest repayment plan for the lowest payment. The monthly figure falls and the interest total climbs, so the cheapest month is the most expensive loan.
- Making extra payments without saying they are for the principal. Some servicers apply them to next month's payment instead, which saves nothing.
When to use it
- Use it to see how long a repayment plan really takes and what the interest adds over that time.
- It is also the tool for the extra-payment question: raise the monthly figure and watch the term and the interest both fall.
Worked example
A 30,000 loan at 5% paid at 400 a month clears in 91 months with 6,046 of interest.
Common questions
What if I pay less?
A payment near or below the interest never reduces the loan, and the calculation stops and says so plainly.
What does paying more save?
Extra payments go entirely to the principal, so the interest falls fast. Raise the monthly figure here and watch both the term and the interest drop.
Related tools
-
Loan Repayment (EMI)
The fixed monthly payment on a loan, and what the interest costs over the whole term.
-
Credit Card Payoff
How long a card balance takes to clear at a given monthly payment, and what it costs.
-
Break-Even Point
How many units must sell before a business covers its costs.
-
Mortgage Affordability
How large a mortgage your income supports, and which limit actually binds.
-
Total Loan Cost
What the repayments add up to, and how much of it is interest.
-
Extra Payment Saving
What paying a little extra each month saves in time and interest.