Repayment Estimator: Your New Secret Weapon In The Fight Against Debt

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I’ll be back … to help you repay your loans.

There are many federal student loan repayment plans to choose from and it can be difficult to pick the right one for you. For example, some offer forgiveness after a certain amount of eligible payments if you qualify, but will you pay more in the long run to get that benefit? How do you know which option is the best fit for your situation?


We all face these repayment choice problems, and the Department of Education has developed a new calculator to help you terminate them. It is called the Repayment Estimator (nope, Skynet was not involved). You just plug in your general loan information and voila!  You can find out how much your monthly payments would be under every repayment plan that you qualify for, and more!

Comparison Made Simple

The Repayment Estimator asks you what type of loans you have, your loan balance, your adjusted gross income (AGI), your marital status, and your family size. From this information, it calculates what your payments would approximately be under every repayment plan, and it lists the plans you qualify for and the ones you don’t.

Each repayment option is displayed with a monthly payment amount—so you can see how much you would pay under each plan and how the payments could change over time. What’s really great about this tool is that you can look deeper into each plan and view the “real” amount you would pay overall, including interest.

Forgiveness Estimates

You may be eligible to have your remaining balance forgiven after a certain number of payments under income-derived repayment plans. But how do you know if you will be eligible in 20 or 25 years? I’ve used a lot of student loan calculators, but few have been able to easily calculate expected forgiveness.  (Check out this calculator for an example. Beware if Excel frightens you! It gives loads of helpful information if you can figure out how to use it.)

The Repayment Estimator does the hard work for you. It anticipates a 5% increase in your income and a 3.3% increase in the poverty guideline each year to come up with what your income-derived repayments will be in the future, as well as your projected forgiveness. (Just keep in mind that these are estimates. Your actual forgiveness may vary.) Having this information may make it easier for you to decide if getting some of your loan balance forgiven is worth paying more in interest due to an extended repayment period.

Crunching The Numbers

Here’s an example. If I have a Direct Subsidized loan for $50,000, an AGI of $25,000, and I am single with a household of one, my cheapest repayment option is the Standard 10-year. Under this plan, I’ll pay $9,051 towards interest over the 10 years it takes to repay the loan, and I’ll owe $492 per month. That is almost a quarter of my take home pay, which may be too much to swallow right out of college.

My most expensive option is income-based repayment where I would pay a whopping $34,181 towards interest, but I’d only owe $97 per month to start. That isn’t even 5% of my net pay, which may be a lot easier for me to manage. I’m also anticipating that $3,974 will be forgiven after 25 years.

These two examples are the extremes. My best option may be one of the other plans like graduated where I pay between $274 and $821 per month or Pay As You Earn where I have nearly $49,000 forgiven and pay $34,914 overall.  What works best will come down to my priorities and preferences. You better believe I’ll be back to use the Estimator to crunch some numbers more easily!

Have you tried the Repayment Estimator? If so, tell us about your experience!


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