Federal loan where the government pays interest while you're in school and during deferment periods.
Unsubsidized Loan
Federal loan where interest accrues from disbursement — even while you're still in school.
Income-Driven Repayment
Plans that cap monthly payments at 10-20% of discretionary income, with forgiveness after 20-25 years.
Loan Servicer
The company that manages your loan account, processes payments, and handles repayment plan changes.
Capitalized Interest
Unpaid interest added to your principal balance, increasing the amount that accrues future interest.
Real-World Examples
Example 1
Standard Repayment
Balance: $35,000, Rate: 5.5%, Term: 10 years
Result: Monthly payment = $380, Total interest = $10,565. Total repaid = $45,565.
Example 2
Extra Payments Impact
Same loan with $100 extra/month
Result: Paid off in 7.3 years instead of 10. Interest savings = $3,200. Saves 2.7 years of payments.
Federal Repayment Plan Comparison ($35,000 at 5.5%)
Plan
Monthly Payment
Total Paid
Forgiveness
Standard (10yr)
$380
$45,565
None
Graduated (10yr)
$250-$550
$47,200
None
SAVE/IBR
$150-$350
Varies
After 20-25 years
Extended (25yr)
$215
$64,500
None
Navigating Student Loan Repayment
Standard vs. Income-Driven Plans
The standard 10-year plan costs the least in total interest but has the highest monthly payment. Income-driven plans offer relief for tight budgets, but extending repayment means paying significantly more interest over time.
The Power of Extra Payments
Even an extra $50-100 per month can shave years off your repayment timeline. Specify that extra payments should go toward principal, not future payments. Target the highest-rate loan first if you have multiple loans.
Refinancing Considerations
Private refinancing can lower your rate but means losing federal protections like income-driven repayment, deferment, and potential forgiveness. Only refinance if you have stable income and don't need the federal safety net.