Student Loan Scenario Analyzer

This page is your command center for student loan scenario analysis. The goal is to help you model the potential financial impact of different repayment strategies before you commit to them.\n\nWhy use this analyzer?\n\n• See the Total Cost: Go beyond just the monthly payment. See how a choice (like refinancing or a payment freeze) affects your total interest paid and final loan balance over the entire life of the loan.\n• Prevent Capitalization: Understand which options, like deferment or forbearance, could lead to interest capitalization (interest being added to your principal), causing your balance to grow rapidly.\n• Compare Alternatives: Directly compare scenarios side-by-side—for example, see if the savings from refinancing outweigh the risk of losing federal benefits like Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) plans.\n\nThe best student loan strategy is the one that minimizes your long-term cost while keeping payments affordable.

Consolidation is the process of combining multiple federal student loans into a single Direct Consolidation Loan.\n\nKey Facts about Federal Consolidation\n\n• New Loan, Single Payment: You receive one new loan with a single interest rate and one monthly payment.\n• Interest Rate Calculation: The new interest rate is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of a percent. Consolidation does not lower your interest rate.\n• Benefits: Makes all federal loans eligible for certain Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF) that they might not have qualified for previously (e.g., Federal Family Education Loan or FFEL Program loans). Can help you access a longer repayment term (up to 30 years), lowering your monthly payment.\n• Drawback: Consolidating resets the clock on any progress toward IDR or PSLF forgiveness, unless you consolidate during a special limited waiver period. Always check current StudentAid.gov rules.

Refinancing is taking out a new private loan to pay off one or more existing student loans (federal or private).\n\nRefinancing Savings & Risks\n\n• Goal: To get a lower interest rate than your current loans, which saves you money and lowers your total cost.\n• Who Benefits Most: Borrowers with high-rate private loans, or federal borrowers with high income who do not need federal protections like IDR or PSLF.\n• The Major Risk (Federal Loans): When you refinance a federal student loan with a private lender, you permanently lose all federal benefits, including access to IDR plans (like SAVE or PAYE), eligibility for PSLF, access to federal forbearance and deferment options during hardship, and potential forgiveness in the event of death or disability.\n\nUse this tool to compare the interest savings from a new, lower rate against the insurance value of keeping your federal protections.

The grace period is a set time after you leave school (graduate, withdraw, or drop below half-time enrollment) before you must start making loan payments.\n\nCost of the Grace Period\n\n• Duration: Typically 6 months for most federal student loans. Private loans vary.\n• Interest Accrual: Subsidized Loans: Interest is subsidized (paid by the government) during the grace period. Unsubsidized & Private Loans: Interest accrues (grows) daily during the grace period. This accrued interest is capitalized (added to your principal balance) when the grace period ends.\n\nSmart Move: Use this calculator to see how much interest will capitalize. Making interest-only payments during the grace period on unsubsidized and private loans can prevent your balance from growing before repayment even starts.

A payment freeze (often called forbearance) is a temporary stop or reduction in monthly loan payments. It is typically easier to obtain than a deferment but has different interest implications.\n\nForbearance vs. Deferment\n\n• Interest Accrual: Forbearance – interest ALWAYS accrues on all loan types (Subsidized, Unsubsidized, PLUS, Private). Deferment – interest does NOT accrue on Subsidized loans (government pays interest) in certain deferment types.\n• Capitalization: Forbearance – accrued interest is capitalized (added to principal) when the freeze ends, leading to a higher balance. Deferment – accrued interest is capitalized on Unsubsidized loans; not on Subsidized loans.\n• Eligibility: Forbearance is generally easier to obtain for short-term financial hardship. Deferment requires meeting specific criteria (e.g., economic hardship, unemployment, active military).\n\nWarning: Because interest accrues on all loan types and is capitalized, a payment freeze can be the most expensive way to pause payments for federal loans. Use this tool to calculate the cost and compare it to Income-Driven Repayment plans, which may offer a $0 payment without the same negative consequences.