Loading Student Loan Repayment Planner…
The length of the schedule, not the time already served on it.
On top of the scheduled payment, and applied to the balance.
$355.27
Scheduled over 10 years at the rate above.
Adding $100 a month ends the schedule 2 yr 9 mo early and takes $3,107 of interest out of it. Every dollar that comes off the balance stops being charged interest from that month on, which is why the saving is larger than the extra you pay in.
Ask your lender, in writing, whether an overpayment is applied to the balance or held against your next instalment. Held against the next instalment it buys you nothing except a month off — the balance keeps accruing at the same rate and the saving above disappears entirely. Some agreements also charge for settling early.
This is a fixed-rate, equal-instalment schedule: origination fees, insurance, late charges and any interest already added before today are outside it. Statutory repayment schemes work differently again — several countries collect a share of income rather than a fixed instalment, with rates and thresholds that are rewritten most years, so take those figures from your own loan servicer rather than from here.
A fixed repayment schedule takes what you owe, the rate charged on it and the number of years you have been given, and turns them into one instalment repeated until the balance is gone. Graduates tend to focus on the rate, because it is the number the loan is advertised with. The term is the lever that moves the total, and it moves it by amounts that make the rate look like a rounding error.
Anyone leaving with several loans has several schedules, not one. Loans taken out in different years usually carry different rates, and averaging them here will flatter whichever is largest. Run the expensive one on its own first: that is the balance any spare money should reach.
That balance on a ten-year schedule asks $355.27 a month. Over the full term you hand over $42,631.87, so the borrowing costs $10,631.87 — around a third of what you originally took out.
Stretch the same debt to twenty years and the instalment drops to $229.26, which is why long terms are offered at all. The interest bill goes to $23,021.91. You have roughly halved the monthly commitment and rather more than doubled the cost of the loan, because every extra year is another year of charges on a balance that is now coming down half as fast.
Keep the ten-year schedule and add $100 on top of each instalment. The debt clears after 87 months rather than 120, and the interest falls to $7,525.17 — 33 months and $3,106.70 saved for $8,700 paid in early. Those last 33 instalments simply never happen, which is where most of the gain comes from.
Raise the extra to $200 and it finishes in 69 months, saving $4,791.72. Notice that doubling the overpayment did not double the saving: the second $100 arrives when the balance is already falling faster, so there is less interest left for it to remove. The first slice of any overpayment is always the most productive one, which is an argument for starting small and early rather than waiting until you can afford a large gesture.
The schedule starts from the balance you type today. If interest built up while you were studying and has since been folded into the principal, enter the figure after that happened rather than the sum you were originally advanced.
Fees are excluded. So is any charge for settling early, which exists on some agreements. And an overpayment only shortens a term if it is applied to the balance — some lenders treat extra money as your next instalment paid in advance, which buys a month off rather than a reduction in what you owe, and the saving above evaporates. That is worth a phone call before you set up a standing order.
Several countries do not collect student debt as a fixed instalment at all. They take a percentage of income above a threshold through the payroll system, cancel whatever is left after a set number of years, and adjust both the percentage and the threshold by legislation — often annually. On those systems the monthly figure below is a hypothetical, and voluntary overpayment can be a poor idea if the balance was never going to be repaid in full anyway.
Check which kind of debt you hold before acting on any of this: the arithmetic here describes a fixed-term contract and nothing else.
The one with the highest rate, always, once every minimum is covered. Directing spare money at the most expensive balance saves the most interest, no matter which loan is largest or which one annoys you most. Clearing a small balance first feels better and costs more.
Yes, when the shorter instalment would push you towards a credit card at a far worse rate, or when the alternative is missing payments entirely. A longer term is expensive insurance against a cash crisis, and expensive insurance still beats the crisis. Refinance downwards later if your income allows it.
Either the payment rises and the end date holds, or the payment holds and the term stretches, depending on the agreement. Model the highest rate you think plausible rather than the current one, and treat the difference between the two results as the size of the risk you are carrying.
Very few people should. A small cash buffer stops an unexpected bill turning into card debt at three times this rate, and any employer contribution you would forfeit by not paying into a pension is an instant return no loan can match. Overpay with what is left after both.