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Got student loans? If you do, whether they’re private or federal, they’ve got specific parameters on how they need to be paid back. And if that repayment timeline is in the relatively near future, it might be time to familiarize yourself with your loan repayment terms.

Sure, it’s not the most fun way to occupy your weekend, but understanding how your loan repayment works—including what the repayment timeline will be and what your interest rates are—is important.

Why? First, it’s important to know exactly what you’ll need to do to pay back your loans as agreed upon. Plus, as part of that process, you can also determine if refinancing your student loans could help you to get a better interest rate, a more favorable repayment term, and so forth.

When you refinance a loan, you’re replacing your old loan(s) with a new one with new terms. If, for example, you applied to refinance your federal student loans with a private lender, they would pay off all your old student loans and issue you a brand new loan with new terms and a new interest rate. Here are some pros and cons of refinancing those loans.

Pros of Student Loan Refinancing

There are plenty of advantages to refinancing your student loans. First, refinancing allows you to combine all of your student loans into one new loan, ideally making repayment less of a hassle. If this appeals to you—and if you have both federal and private loans—you may want to make sure that the lender you choose will combine those two types (federal and private) into one loan.

SoFi student loan refinancing allows borrowers to combine federal and private loans. If you only have federal loans, refinancing with SoFi is absolutely still an option. But you could also consider consolidating your federal loans with a Direct Consolidation Loan because when you refinance with a private lender, you’ll lose access to federal loan repayment benefits.

But when you consolidate federal loans with a Direct Consolidation Loan , you’ll still be able to take advantage of federal loan repayment benefits you qualify for, like deferment, income-driven repayment plans, and Public Service Loan Forgiveness (PSLF).

However, when you consolidate your federal loans, your new interest rate will be the weighted average of your combined loans rounded to the nearest eighth of a percent—so you could end up paying slightly more in interest than you were initially.

Another potential benefit of refinancing student loans with a private lender is that you may qualify for a better interest rate if your financial profile has improved since you took out your original loan(s). You can use handy tools like our student loan refinancing calculator to get an idea of how much you could potentially save on interest if you opt to refinance.

You may also be able to get a more favorable term. If, for example, you need a longer term to have payments fit comfortably into your budget, that’s typically an option. Or, if it’s more important to you that you get out of debt faster, making fewer interest payments overall, then you could potentially select a shorter term.

Here’s something else to consider. When you first got your loans, you might have needed a co-signer. Since then, you may have established stronger credit in your own name and would like to release your co-signer. In that case, you may be able to apply to refinance your student loans in just your name, thus removing your co-signer in the process.

Or, you may discover that, if you have someone with strong credit serve as your co-signer when you refinance, you may benefit from more ideal repayment terms.

Is refinancing right for everyone, though? No. Read on!

Cons of Refinancing Your Student Loans

If you refinance federal student loans (with or without private student loans included in the refinance), then you’d lose any federal repayment benefits you might have wanted to use. This includes any forgiveness programs, including those connected to income-driven repayment plans and deferment. So, we strongly urge you to investigate those federal programs first to see what’s best for your unique situation before deciding whether or not to refinance.

If you choose to go with a longer term when refinancing and pay according to that agreement, you’ll likely pay more in interest than if you chose a shorter term. However, extending your loan term may get you a lower monthly payment, thus making your monthly payments more manageable.

Some lenders charge origination fees when you refinance. If they do (SoFi doesn’t!), then you’ll need to factor this into your decision. You may also want to check to see if your lender will honor your grace periods.

Want to see if refinancing could be right for you? We’ve created a quick quiz that might help.

IMPORTANT: The projections or other information generated by this quiz regarding the likelihood of various outcomes are hypothetical in nature, do not reflect actual results, and are not guarantees of offers.

One More Thing to Consider

Let’s say you’ve just finished college and your six-month student loan grace period is coming to an end. You might take our quiz and realize that refinancing could help you get out of debt quicker, or make your loans more manageable. Alternately, you might decide that refinancing isn’t best for you right now, and that’s perfectly okay, too.

If the latter is true for you but you’re still curious about refinancing, you can always return to see if you pre-qualify for a better interest rate when your financial situation has changed. Once you’ve been out of college for a few years, increased your earnings, and established a longer credit history, you may find that you’re a better candidate for student loan refinancing.

Learn more about refinancing your student loans with SoFi.

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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION. Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Student loans can feel like a deep dark secret that no one wants to talk about. Maybe you’re an expert in recycling that monthly loan statement without even opening it, or you’ve set your loan payments on autopay and hope to never think about them again.

But ignoring your student loans doesn’t mean they go away. No one wants to be in debt, and the prospect of paying off a large student loan can feel daunting. Here are a few tips and strategies that could help you when it comes time to start paying back federal student loans.

When Do You Have To Pay Back Federal Student Loans?

If you just graduated or left school, you may have some time before you’re required to start paying back your student loans. New grads generally have a grace period of six months before they are required to start throwing their hard-earned cash at their federal student loans.

The exact length of the grace period depends on the type of loan and your specific circumstances. Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans all have a six-month grace period, which means that if you graduate in spring you may not need to make federal student loan payments until around October, depending on the date you graduate. If you’re a winter grad, you can expect to start repayment around June.

Unfortunately for graduate students, Direct PLUS Loans don’t have a grace period, which means that you’re on the hook for making payments 60 days after your final loan disbursement. You may also lose your grace period if you consolidate your federal student loans with the government during your grace period. One caveat—if you’re a member of the armed forces on active duty, you may be eligible to extend your grace period during a deployment.

Private student loans are a different storyーthese are loans from private lenders that set their own terms when it comes to loan grace periods. This means that private student loans may not offer a grace period at all, or that it may be shorter or longer than the federal student loan grace period.

How Do I Pay Back My Federal Student Loans?

Even though you may not be required to start paying off your student loans while they’re in a grace period, you might want to think about starting payments early.

Why start making payments before they’re due? During a grace period, some loans may still be accruing interest. That means that every month you wait to start making payments is another month that the total loan amount grows larger. Starting loan payback as soon as possible may help save on those capitalizing interest costs.

Figuring out how to pay federal student loans can be confusing. Paying back federal student loans starts with getting to know your loan servicer. There are several different loan servicers throughout the country who are responsible for managing federal student loans. Luckily, most loan servicers have robust websites where you can manage your student loan payments.

Your loan servicer’s website should allow you to view your loans, choose a payment plan, and set up automatic payments. Generally, you can make payments directly through the website, which means that you can avoid having to write out a check and worrying that it will get lost in the mail on the way to your loan service provider.

Choosing A Loan Repayment Plan

One integral loan repayment strategy is choosing a student loan repayment plan. If you are paying off federal loans, you may be able to choose between a few different repayment plans depending on which best fits your financial situation.

The Standard Repayment plan is the default loan repayment plan for federal student loans. Under the Standard plan, you pay a fixed amount every month for up to ten years in order to pay off the full balance of your loan.

Extended Repayment plans work similarly to the Standard Repayment plan, but the term of the loan is longer. Extended Repayment plans generally have terms between 12 and 30 years. The longer term allows for lower monthly payments, but you may end up paying more over the life of your loan thanks to additional interest charges.

For qualified applicants, there are also loan repayment options that are tied to the amount of your discretionary income . The Graduated Repayment Plans, for example, starts with lower monthly payments that increase in amount over time as you progress through your career and, presumably, earn more as you go along.

With income-driven repayment plans, the amount you owe on your student loans is tied to the amount of money you make. Income-based repayment plans are generally capped at 25 years, and any remaining balance on your loan may be forgiven after that term.

While you’ll automatically be put onto the Standard Repayment Plan if you do nothing else, you may want to consider choosing a different repayment plan depending on your financial situation.

For example, if you’re itching to pay off your student loans as soon as possible, the Standard Repayment plan may work for you, but if you’re worried about affording loan payments, you may decide that you’re more comfortable with an income-driven repayment plan. Picking the right repayment plan is one strategy to help you pay off your federal student loans.

Refinancing Student Loans

One strategy you may think about considering for paying back federal student loans is student loan refinancing. For some grads, loan refinancing may help save money over the term of your loan.

What are the benefits of refinancing with a private lender instead of just paying off the federal loans you currently owe? Student loan refinancing combines all your current federal and private student loans into one brand-spankin’ new loan from a private lender, hopefully with better terms.

This means that you may be able to snag a lower monthly payment or even a shorter repayment term, both of which could save some serious cash over the life of your loan—depending on the term you choose, of course. Loan refinancing isn’t right for everyone, however, and if you refinance your federal loans they will no longer be eligible for any federal repayment assistance, like the Public Service Loan Forgiveness program or any income-driven repayment plan.

Finding the right strategy to pay off your student loans can help you take control of your finances. See if refinancing with SoFi is right for you.

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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION. Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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According to the American Association of University Women , using data from the Department of Education, women currently hold almost two-thirds of the country’s student loan debt, nearly $929 billion of the total outstanding amounts of nearly $1.5 trillion.

That’s a shocking disparity—and, when looking specifically at people who complete bachelor’s degrees, it’s black women, the Chronicle of Higher Education reports, who hold the greatest amount of debt of “any racial, ethnic, and gender group.”

To add to the challenging situation, women who hold more than one degree tend to earn as much as men who hold one educational degree less than they do.

Because of this gender-based gap in salaries, women may have less disposable income, which means they typically need more time to pay back their student loans—which in turn means they’re often paying significantly more in interest because of their longer loan terms.

This situation raises numerous questions, including how women can get themselves out of education-based debt more quickly. This post will take a deep dive on those subjects and offer some tips that could help anyone facing student loan debt.

Average Student Loan Debt: Crisis in America

Before we delve into gender-specific information, the reality is that the average amount of student loan debt is troublesome for more than just women. Average student loan debt hovers around $28,500, and the amount of debt continues to grow.

Student loan debt in the United States, in total, is greater than all of the credit card debt in our country. It’s greater than the sum total of our car loans. In fact, it’s the second highest form of debt in the United States today, only behind home mortgages.

And, not everyone can keep up with their student loans payments, so it’s not surprising that many people are delinquent on them, or even in default. Lenders can define “default” in somewhat different ways; borrowers in the Federal Direct Loan program or the Federal Family Education Loan program, for example, are considered in default after missing nine month’s worth of payments.

Multiple consequences can exist for people with loans in default, including suffering from substandard credit, having tax refunds garnished and more. Your lender can sue you and, in some cases, you would also be responsible for court fees.

Delinquency can also have a negative impact on your credit, which can make it difficult to get a mortgage, a car loan, a credit card and the like. It may even be challenging to get utilities in your name or to buy homeowners’ insurance.

Student Loan Disparity: Why Are Women in Debt?

As AAUW.org (the website for the American Association of University Women) reports, 57% of today’s college students are female, which would by itself mean that more women have the potential to need more in student loans. But their report, titled Deeper in Debt: Women and Student Loans, goes much further in their explanations about why women owe more.

The cost to attend college, according to AAUW, has increased by 148% since 1976, while the median household income since then has only gone up by 21%.

This explains why increasing numbers of students take out loans to fund their education, although these particular statistics apply to men and women alike.

More specific to women, in 2017, T. Rowe Price shared study results indicating how parents who have only sons “are going to greater lengths to support their kids’ college education than parents of all girls.”

Parents of all boys were found to be more willing to save more, pay more, and borrow more funds to pay for their children’s education, suggesting that “antiquated expectations based on gender” may still be in existence more than we might realize.

Here are statistics from that report:

•  When it comes to money saved for their children’s education:

◦  50% of parents of all boys have saved some money

◦  39% of parents of all girls have saved some money

•  When it comes to contributing towards college:

◦  83% of parents of all boys give money at least monthly

◦  70% of parents of all girls give money at this regularity

•  17% of parents of all boys say they plan to cover all college expenses for their children, while only 7% of parents of all the girls say that.

•  When presented with this statement: “I would consider sending my kids to a less expensive college to avoid taking on student loans”:

◦  60% of parents of all boys agree

◦  72% of parents of all girls agree

•  When asked if they’d personally take on $75,000 or more in student loans to help children with college expenses:

◦  23% of parents of all boys would

◦  12% of parents of all girls would

This indicates that boys receive more familial help with college funding than girls. And, when women get jobs to help with college expenses, pay disparity can play a role in their overall ability to contribute.

Then, when it’s time for repayment, this gender pay disparity means that women often have less disposable income. Whether women have children or not, or take time off from work to be with them or not, a tighter financial situation can cause them to choose longer terms for their student loan repayments, which means they could be paying down their balances more slowly and pay more in interest, overall—neither of which is desirable for financial wellness, much less for growth of wealth.

Ideas for Solving the Problem of Higher Education Loan Debt for Women

AAUW shared a five-prong solution they believe will help facilitate college funding for women, which includes:

•  Congress should expand Pell Grant availability for students with low incomes to reduce how much they’ll need to take on debt to finance a degree.

•  Legislators, both state and federal, should boost funding for public colleges/universities and otherwise support ways to provide debt-free options for students.

•  Lawmakers, including the Department of Education, should make income-driven repayment options easier to obtain.

•  Institutions should provide services, including child care, and otherwise address academic and financial needs of female students.

•  Individuals should join organizations that support closing the gender pay gap.

There’s another way to pay down student loans more quickly: consolidating them and refinancing them into one low-interest loan. Not all lenders will consolidate private and federal loans together, but SoFi does. Here’s more!

Refinancing Your Student Loans

Refinancing your student loans into one at a lower interest rate can mean you could pay less, over the life of the loan. How much you pay overall depends largely on the length of your term. So, for example, if it would help with cash flow to have lower monthly payments, choosing a longer term can help—but that could mean you pay more in interest. If you’d like to pay off your debt sooner and pay back less, overall, you can select a shorter term.

And, since SoFi doesn’t have a prepayment penalty, if you choose a longer term and end up with extra cash through a raise or a bonus, for example, you can put that windfall toward your refinanced loan payment and help pay down your loan faster.

To find out how you could benefit from refinancing, you simply need to know your outstanding balances, plus the interest rates you’re being charged.
At SoFi, you’ll also have access to live customer support. There are no application fees. No origination fees. No prepayment penalties.

Whenever you’re ready to refinance your student loans, we’re here to help. It’s fast and convenient.

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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION. Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Ever have a friend complain about how the payments they’re making towards their loans aren’t actually going to pay off…well, the freakin’ loans? Your friend is onto something.

At the beginning stages of a loan, a big proportion of the loan payments that a borrower makes are applied towards the loan’s interest as opposed to the principal balance. Especially if the loan is spread out over a long time-frame such as many years, most early payments are applied almost totally to interest.

Due to a method of calculation called amortization, loan payments are split between interest and principal, heavy on the interest in the beginning stages. Towards the end, the effect usually reverses. When an amortization calculation is displayed visually, it is called an amortization schedule and graph.

We’re going to get into some of the nitty-gritty amortization info, but before we go there, we just want to be straight with you: This is an incredibly complex topic. We’re going to try to break it down the best we can, but please understand that this info is general in nature and does not take into account your specific objectives, financial situation, and needs; it should not be considered advice. SoFi always recommends that you speak to a professional about your unique situation. Okay, and we’re back in.

Amortization is calculated on all installment loans, which are loans that have regular, predetermined monthly payments, such as mortgages and student loans. Below, we will discuss how amortization is calculated, take a closer look at student loan amortization and a student loan amortization schedule, and explore some ideas for borrowers who want to lessen the amount they’ll pay in interest over time.

Understanding Amortization

Before we dive into a student loan amortization calculation and schedule, it is helpful to first understand the basics of calculating the cost of a loan. You’ll need to know these three variables:

1. The value of the loan, also known as the principal
2. The interest rate on the loan (and whether it is fixed or variable)
3. The duration, or length, of the loan (usually given in months or years)

With this information, it is possible to determine both the monthly payment on the loan and the total interest paid during the life of the loan, assuming all payments are made. Although the math itself is difficult, it is easy to plug the information into an online student loan interest calculator.

The next step is to determine how much of each monthly payment is going towards both interest and principal. This is where the amortization calculation and the amortization schedule come in. As mentioned, amortization happens only on “installment” loans, and all student loans are installment loans.

There are two types of loans: installment loans and revolving credit. A mortgage, student loan, or car loan are all examples of installment loans. With an installment loan, the borrower is loaned an amount of money (called the principal) to be paid back over a designated amount of time, with interest.

Revolving credit, on the other hand, is not a loan disbursed in one lump sum, but is a certain amount of credit to be used as the borrower pleases, up to a designated limit. A credit card and a line of credit are forms of revolving credit.

A borrower’s monthly payment on revolving credit is determined by how much of the available credit they are using at any given time; therefore, minimum payments change from month to month.

Student Loan Amortization Examples

Because student loans are a form of installment loan—a specific amount of money is disbursed to the borrower—student loans are amortized. Parts of each payment are spent on both the loan’s principal and its interest.

At the front-end of the loan, a much larger proportion will be allocated to interest. Due to the way compounding returns work, the effect is more dramatic the longer the length of the loan.

Take, for example, a $30,000 loan at 7% fixed interest rate amortized over a 10-year repayment period. The borrower’s monthly payment is $348.33 total (rounded down to $348 for simplicity in the grid below). Each year, the hypothetical borrower will pay $4,180 total towards their loan.

This never changes, although the proportion that is paid both towards principal and interest will. Here’s how that hypothetical borrower’s hypothetical loan amortization might look. (All examples calculated using this student loan interest calculator, by Bankrate .)

Amortization Schedule Student Loan $30,000, 7% interest over 10 years starting January 2019

Date	Interest Paid	Principal Paid	Balance
Jan, 2019	$175	$173	$29,827
Feb, 2019	$174	$174	$29,652
Mar, 2019	$173	$175	$29,477
Apr, 2019	$172	$176	$29,301
May, 2019	$171	$177	$29,123
Jun, 2019	$170	$178	$28,945
Jul, 2019	$169	$179	$28,765
Aug, 2019	$168	$181	$28,585
Sep, 2019	$167	$182	$28,403
Oct, 2019	$166	$183	$28,221
Nov, 2019	$165	$184	$28,037
Dec, 2019	$164	$185	$27,852
2019	$2,032	$2,148	$27,852
2020	$1,877	$2,303	$25,852
2021	$1,710	$2,470	$23,079
2022	$1,532	$2,648	$20,431
2023	$1,340	$2,840	$17,591
2024	$1,135	$3,045	$14,546
2025	$915	$3,265	$11,281
2026	$679	$3,501	$7,780
2027	$426	$3,754	$4,026
Jan, 2028	$23	$325	$3,701
Feb, 2028	$22	$327	$3,374
Mar, 2028	$20	$329	$3,045
Apr, 2028	$18	$331	$2,715
May, 2028	$16	$332	$2,382
Jun, 2028	$14	$334	$2,048
Jul, 2028	$12	$336	$1,712
Aug, 2028	$10	$338	$1,373
Sep, 2028	$8	$340	$1,033
Oct, 2028	$6	$342	$691
Nov, 2028	$4	$344	$346
Dec, 2028	$2	$346	$0
2028	$154	$4,026	$0

So, during the first year, the example borrower’s monthly payments are made up of about half interest and half principal. At the end of that first year, the borrower has paid $4,180 total towards their student loan. $2,032 of that went to interest, while $2,148 went to paying down the principal.

At the end of the first year, the loan is not reduced by the total amount the borrower had paid, but only the amount paid towards the principal—the $2,148. The $30,000 loan is therefore valued at $27,852 at the end of the year.

That’s the whole thing with amortization—because only a small proportion of payments is applied to the loan’s principal at the early stages, the interest rate charges continue to be calculated off a relatively high loan balance figure. Eventually, this swings in the other direction as the loan’s principal is reduced.

With each passing month and year paying down debt, more of each payment is allocated towards the principal. By the ninth and final year, the borrower pays only $154 to interest and $4,026 to principal.

Let’s look at another example of a hypothetical student loan amortization schedule, but along a longer timeline, such as twenty years. It should be noted that a twenty-year payback period isn’t “standard” for federal student loans, but the important takeaway here is the impact of time on amortization calculations.

Here’s a table with the results of a hypothetical $60,000 student loan at a 7% fixed rate, paid back over 20 years.

Amortization Schedule Student Loan $60,000, 7% interest over 20 years:

Date	Interest	Principal	Balance
Jan, 2019	$350	$115	$59,885
Feb, 2019	$349	$116	$59,769
Mar, 2019	$349	$117	$59,652
Apr, 2019	$348	$117	$59,535
May, 2019	$347	$118	$59,417
Jun, 2019	$347	$119	$59,299
Jul, 2019	$346	$119	$59,179
Aug, 2019	$345	$120	$59,060
Sep, 2019	$345	$121	$58,939
Oct, 2019	$344	$121	$58,817
Nov, 2019	$343	$122	$58,695
Dec, 2019	$342	$123	$58,573
2019	$4,155	$1,427	$58,573
Jan, 2038	$31	$434	$4,942
Feb, 2038	$29	$436	$4,506
Mar, 2038	$26	$439	$4,067
Apr, 2038	$24	$441	$3,626
May, 2038	$21	$444	$3,182
Jun, 2038	$19	$447	$2,735
Jul, 2038	$16	$449	$2,286
Aug, 2038	$13	$452	$1,834
Sep, 2038	$11	$454	$1,379
Oct, 2038	$8	$457	$922
Nov, 2038	$5	$460	$462
Dec, 2038	$3	$462	$0
2038	$206	$5,376	$0

In this example, each monthly payment for the 20-year duration is $465.18 (again, rounded down to $465 for simplicity’s sake above). In January 2019, the first month of the first year of the loan, $350 is paid towards interest, and just $115 is paid towards the principal. That’s less than 25% of the total payment, compared to 50% in the previous example.

By the end of the hypothetical loan, hardly any of the payment is allocated towards interest, and the majority is applied to the principal. In the very last monthly payment in the last year, only $3 goes towards interest and $462 to principal. In the last year, only $206 total goes towards interest versus $4,155 in the first year.

To calculate your student loan amortization schedule, you too can use an online calculator . It can also be really helpful to see the numbers in graph form, and to see each amortized payment listed out—so you know how much of your money is going to both interest and principal in each monthly payment.

Can You Pay Less Interest on Your Loans?

If amortized payments are frustrating to you, you’re not alone. One way to possibly alleviate the pain is to pay your loan back faster than the stated term. Especially at the beginning of the loan’s repayment term, making additional payments towards the principal might lower what you’ll owe in interest.

If you go this route, consider letting your lender know that the additional payment is to be applied to the principal of the loan, not the interest. If you are mailing a check, you could include a note. If you’re making a payment online, you may want to call your loan servicer to make sure that they apply the money correctly.

For borrowers with multiple loans that want to expedite their debt payment, it’s hard to know where to start. If your goal is really to nip loan amortization in the bud, you might want to consider the “debt avalanche” method of debt repayment.

Using this method, you would choose the source of debt with the highest interest rate and work on “attacking” it first, while making the minimum payment on all other loans. After the highest interest rate loan is paid off, you would move to the next highest interest rate loan, and so on.

Graduates can also consider refinancing their student loans. When you refinance, you’re essentially paying off your old loan or loans with a new loan from a private lender, like SoFi. Ideally, you refinance in order to get a lower rate on your loans than you currently have.

No matter your current financial standing, it’s usually worth checking to see if you qualify for a lower rate than you’re currently paying. With refinancing, you’re also usually able to adjust other terms to your loans, such as the repayment schedule. You can extend it, if you’re looking for lower monthly payments, or shorten it, if you want to pay less in interest—and outsmart amortization—on your loan.

Borrowers shouldn’t refinance their loans if they’re currently using one of the special federal loan repayment plans such as income-driven repayment or Public Service Loan Forgiveness. When you refinance, you will lose access to these programs. Otherwise, it’s usually worth looking into.

Want to spend more money on the things you love, and less on student loan interest? See if refinancing your loans with SoFi is right for you. Checking your rate is free and takes as little as two minutes.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION. Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Does anyone relish the thought of paying student loans? Are there former students out there eagerly awaiting the money that gets withdrawn from their bank accounts each month? Probably not.

Nonetheless, if you’re dreading your student loan payments each month because you aren’t sure whether you’ll be able to cover the minimum payment, there are solutions you could consider. One option graduates struggling to make the minimum payments on their student loans might consider is hiring a student loan consultant to help create a customized repayment plan.

There are pros and cons to hiring a student loan consultant. On the one hand, their advice and advocacy can be invaluable, but on the other hand, some consultants may not be worth the expense.

We want to be clear that we’re neither advocating nor dissuading readers from hiring a student loan consultant—this article is not meant to be advice. We just want to make sure you have some key facts to help with an informed decision. Here are a few things to keep in mind if you’re considering a student loan consultant.

What is a Student Loan Consultant?

Americans owe more than $1.5 trillion in student loans, according to Pew Research Center . As student loan debt has increased, student loan consultants have emerged to help students navigate the loan process. Most student loan consultants work independently from colleges or universities, and are not affiliated with specific repayment programs. Student loan consultants work one-on-one with borrowers to identify their repayment needs and try to set them up on a path of debt payoff success.

Knowing What They Can Help With

The five basic things student loan consultants can help you with include recommending a student loan repayment strategy, offering personalized guidance specific to your finances, explaining student loan jargon, researching your loan details, and calling lenders on your behalf.

Before seeking out a student loan consultant, it might be helpful to identify your specific needs. If you don’t understand the difference between consolidation and refinancing, for example, then talking with a consultant about student loan jargon could be helpful.

If calling lenders sends you into a panic, maybe that’s where you want the consultant’s help. And if you’re struggling to make your minimum monthly payments, you could potentially talk to a consultant about finding a better student loan repayment plan.

Understanding What You’re Paying For

The cost of a student loan consultant can vary from around $300 to a much higher monthly or yearly rate. Making sure their services are worth the money you are paying is important, of course, and that can be done by confirming that their services aren’t something you could do on your own—like finding a federal income-driven repayment plan (which we’ll get into below). It’s also important to ensure that the cost doesn’t prevent you from making your student loan payments.

Before speaking with a consultant, doing some research on the topic and finding out what is possible and what sounds too good to be true can help you weed out any not-legit (read: scammy) student loan consultants. And when you’re trying to understand what you can do on your own (without a consultant’s help), a good place to start is the Consumer Financial Protection Bureau .

Knowing What Programs Are Available for Free

A fair number of programs are available to everyone, without paying a fee. Something to look into before seeking out a student loan consultant could be federal repayment plans.

Typically, when you graduate from college or reduce your attendance to under half-time, you’re automatically put on a 10-year Standard Repayment Plan. However, borrowers looking to reduce the monthly payments on their federal student loans could consider income-driven repayment plans, which brings your monthly payment to 10% to 20% of your discretionary income (depending on the plan).

Because these repayment plans extend your loan term, you may pay more interest over the course of your loan, but it should reduce your monthly payments in the immediate.

Asking a Neutral Party for Help

If you have questions about a federal student loan, you can ask for help from the Federal Student Aid Ombudsman Group , which serves as a neutral party. They can resolve discrepancies with loan balances and payments, and help identify loan repayment options. You can also try to resolve the dispute before contacting the Ombudsman Group. Or you can file a complaint through the Consumer Financial Protection Bureau.

Considering a Nonprofit Credit-Counseling Agency

The National Foundation for Credit Counseling can help you find a qualified credit-counseling agency if that’s a service that appeals to you. The U.S. Department of Justice also offers an online database of credit-counseling agencies .

Making Sure the Consultant Isn’t Providing a Redundant Service

It’s important to make sure the consultant’s service isn’t something you could do on your own. For example, you could lower your monthly payment on your federal student loans by opting for an income-driven repayment plan without paying a consultant for their services.

You can also consider consolidating your federal loans through a Direct Consolidation Loan . A Direct Consolidation Loan allows you to combine all of your federal loans into one, and gives you a new interest rate that’s a weighted average of your current interest rates, rounded up to the nearest eighth of a percent. This is a step that may help get you a lower interest rate, lower monthly payments, or a more flexible repayment plan.

Refinancing Your Student Loans

If you’re looking for alternative ways to pay off your student loan debt, you could also consider student loan refinancing with a private lender. When you refinance your student loans, you essentially apply for a new loan and then use that loan to pay off one or more existing student loans. And the refinanced loan might come with a better interest rate or loan term (hopefully).

Extending your loan term through refinancing can make your monthly payments more manageable—though it would likely mean paying more in interest over the life of the loan.

Alternately, a refinanced loan with a lower interest rate and shorter loan term could cost you less in interest over the life of the loan. Keep in mind, however, that refinancing with a private lender means you’ll no longer be able to access federal loan benefits like income-driven repayment plans.

If you are looking to better manage your student loan debt, consider refinancing your loans with SoFi. You can find your new rate in just a few minutes.

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External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
FOR MORE INFORMATION. Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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