How To Calculate Your Federal Student Loan Payment

Uncategorized / Friday, April 28th, 2023

In case you have been living under a rock, or just have your fingers stuck in your ears, federal student loans will resume accruing interest and requiring payment later this year, possibly by August 29, 2023. Technically, payments will resume 60 days after the Supreme Court rules on President Biden’s Student Loan Forgiveness Plan or June 30, 2023, whichever is soonest. Since we are in April now, its a good time to check on your balances, check your budget, and make a plan for your loan repayment. There are a lot of loan repayment plans and your best plan may not be the lowest monthly amount (hint: its almost for SURE not the lowest monthly amount).

Each person’s financial situation is unique and some people may be about to have their loans forgiven through the Public Service Loan Forgiveness program, are hoping to get them wiped out by the one time debt relief program (if implemented), or others may not be able to afford much for minimum payments. Ideally, the best advice is to pay as much as your budget will allow because that will allow your to save money by not paying as much on interest payments. Student loan balances can be very high and unpaid interest can capitalize monthly, meaning your principal amount keeps growing and you now pay interest on an even larger balance. This is how you end up owing way more than you ever even borrowed, and then paying back twice that amount in the end thanks to interest.

My goal is to pay off our loans as fast as possible and to pay them off before our kids go to college, the sooner the better ideally. That sounds silly since our kids are so small now and one legit just potty trained a month ago, but it will take a long time to pay these high loan balances and when I calculate the repayment schedules many show repayment dates 20+ years into the future and paying an extra $30,000 in interest. No thank you!

First things first, sign into your federal student loan servicer’s website to see what they are listing your balance and due date as. My husband logged into his today and found that his loans had been recently transferred to another loan servicer, so make sure that you know who is managing your loans currently. After setting up the login information for the new loan servicer, we found that they are listing his next payment as due in September 2023. Also, the estimated amount due monthly was $310, way below what we had been paying monthly pre-pandemic.

Check your current loan repayment plan. Perhaps it is because my husband’s student loans transferred loan servicers, but it appears that the loans defaulted to a graduated extended repayment plan. I am guessing that the new service provider automatically reverted the loans into an extended repayment plan when it took them over. Why? It makes the loan processor a ton more money if they put their customers into a long loan term because they pay more interest over time. If we follow the default repayment plan, we would still be paying off student loans while our kids are in college. Plus, we would pay an extra 50% of the loan balance in interest. Ughhhhh!

Review the other repayment plan options available to you. You can go to, sign into your account, and then run some simulations there based on your income and goals. The website is actually really helpful. When I ran the numbers, it suggested that the income-contingent repayment plan (ICR) would be a good fit for us. Interestingly it didn’t suggest the standard repayment plan, which is the most straightforward plan to pay off your debt the fastest with the lowest interest payment. Perhaps our debt-to-income ratio is too high. No bother. I know our budget well and know exactly what we can afford to pay, even if the loan simulator suggests otherwise.

Now, everyone’s situation is different and their financial goals are different. As I said, we have a good joint income that wouldn’t qualify us for teeny payments resulting a remaining balance after 20 years that would be forgiven, we are not seeking PSLF. Instead, our goal right now is to pay the student loans off as fast as possible. For sure we want to have them paid off before our oldest kid starts college in 11 years. Ideally we will pay them off in a few years so that we can open up cash flow to pay for private school if necessary as our local public schools are not very good and while we love public schools we don’t want to get stuck in a situation where our kids needs a change or want to pursue an opportunity at another school and we cannot afford to pay private school tuition because we are saddled with debt.

Hence, the best option for us is not actually any of the options shown to us on’s loan simulator. Instead, we will select the plan with the shortest repayment timeline and then pay over that amount to pay at the rate the repayment calculator showed will get it paid off faster and with less interest but that is still within our monthly budget. If we cannot pay the higher amount some month then we are not locked into it, which I appreciate. But our goal is to pay that higher amount and increase it if at all possible.

At the payment amount we decided on, we will be paying about 11% of our monthly income just to paying down federal student loans and 30% to debt overall. It’s hefty, for sure. We have a healthy monthly income but when you pay so much for debt and then throw all the other living expenses on top, you end up pretty flat. Debt is a big reason why people who make an upper middle class income still live paycheck to paycheck. Even for frugal people like me.

At this accelerated payment rate, the loan simulator showed that we would pay about $15,000 in interest and STILL take 8 years to pay it all off. *insert crying emoji here* Oh good lord.

But what light through yonder window break? It is the sun, rising to show that in about a year our second kid will be out of daycare and starting pre-kindergarten at the public school. Huzzah! (yes yes, I know that is all a Romeo & Juliet reference; nerd alert!) At that point we can double our student loan payments to pay 20% of our income to student loans (again, ouch!!!) and we hope to have the loans paid off 3 years later. What a difference in a timeline and interest savings!

The idea of sacrificing to pay 40% of our income towards debt repayment can feel like a punch in the gut, but because we are pretty used to frugal living it makes me feel actually giddy with excitement that we will be able to finally see some major improvement in our finances in just a few short years. Remember, we have been struggling with debt for over 10 years and scraped by on an income that barely covered our expenses for many of those years, but we still managed to pay off $40,000! And now that our income has risen, I am excited to put it to work paying off debt and enjoy all the freedom and flexibility that debt-free living can come with. I can almost taste it!

So, I hope that you too can check out the loan simulator, consider your financial needs and goals, and see what plan works best for you. The best plan for you may NOT be one that the website offers, as was the case for us. You can calculate your own estimated payment and see the pay off date and estimated total interest. Let those numbers shock you, anger you, and guide you to push to increase that monthly payment so that you can get that debt cleared as soon as possible and not double your total debt loan by paying through the nose in interest. Calculate what works for you and your financial goals. You can do it!