Student loans are paid off like any other fixed-rate loan: the same payment each month, with more going to interest at the start. Small extra payments make a big difference because they cut the balance that interest is charged on.
Here are the 2026-27 federal rates, the payment formula and a worked example.
Federal student loan rates for 2026-27
| Loan | Fixed rate |
|---|---|
| Direct Subsidized and Unsubsidized (undergraduate) | 6.52% |
| Direct Unsubsidized (graduate and professional) | 8.07% |
| Direct PLUS (parents and graduate students) | 9.07% |
How the payment is worked out
Payment = balance × r ÷ (1 − (1 + r)^−n)r = yearly rate ÷ 12, n = number of monthly paymentsWorked example
Example: $30,000 at 6.52% over 10 years
Payment: $340.95 a month. Total interest: $10,914.
Paying $100 extra a month clears the loan in 7 years 2 months and saves $3,359 in interest.
Before paying extra, it usually makes sense to get your full 401(k) match and pay off higher-rate debt first. To fit payments into a budget, try the 50/30/20 budget calculator.
How to use this calculator
- Enter your loan balance and interest rate.
- Set the repayment term. The standard federal plan is 10 years.
- Add an extra amount a month to see what it saves.
FAQs
What are federal student loan rates for 2026-27?
For loans first paid out from 1 July 2026 to 30 June 2027: 6.52% for undergraduate Direct Loans, 8.07% for graduate unsubsidized loans and 9.07% for PLUS loans. They're fixed for the life of the loan.
Should I pay off student loans early?
It saves interest at your loan's rate, which is a guaranteed return. But it usually makes sense to first get any 401(k) match, build an emergency fund and pay off higher-rate debt like credit cards.
Do extra payments lower my monthly payment?
Usually not. They shorten the loan instead. Ask your servicer to apply extra payments to the principal rather than to future payments.
What about income-driven repayment or forgiveness?
Those plans set payments by income and may forgive a balance after many years. If you're aiming for forgiveness, paying extra may not help. This calculator covers standard fixed payments.
Sources
- Federal Student Aid: Interest rates for Direct Loans, July 2026 – June 2027
- StudentAid.gov: Interest rates and fees
Results are estimates and aren't tax, legal or financial advice. For your own return, check with a CPA or enrolled agent. Spotted a mistake? Tell us.