Federal vs Private Loan Calculator
Rate Isn't the Only Thing That Differs
Federal and private student loans are often compared purely on interest rate, but they're structurally different products: federal loans carry fixed rates set by law each year and come bundled with income-driven repayment and forgiveness eligibility, while private loans are underwritten individually and can offer a lower rate to borrowers (or co-signers) with strong credit. This calculator isolates the pure dollar comparison — monthly payment and total interest over the life of each loan — so the rate and term tradeoff is explicit before other factors are weighed in.
The Formula
The calculator computes this standard amortized monthly payment separately for the federal loan (its rate and term) and the private loan (its rate and term), then compares total cost — monthly payment × number of payments — between the two.
Worked Example
| Federal (6.53%) | Private (9.5%) | |
|---|---|---|
| Monthly payment | $341.10 | $388.19 |
| Total interest | $10,932.24 | $16,583.12 |
| Total cost | $40,932.24 | $46,583.12 |
This example uses illustrative rates to show the calculation — enter the actual rates on your offers, since federal rates are set annually and private rates vary by lender and credit profile.
Where This Calculation Matters
- Grad school and parent borrowing — where federal PLUS loans and private loans are both realistic options, the total-cost gap helps quantify what the federal protections are "worth" giving up.
- Co-signed private loans — a strong co-signer can sometimes bring a private rate below the federal rate, flipping which option is cheaper.
- Refinancing decisions later — this same comparison logic applies when deciding whether to refinance existing federal debt into a private loan.
How to Use This Calculator
- Enter the loan amount you're borrowing.
- Enter the federal loan's interest rate and term in years.
- Enter the private loan's interest rate and term in years.
- Select Calculate to see which option costs less in total, and by how much.
Related Calculations
If you're comparing a refinance of existing debt rather than a new loan, use the Student Loan Refinance Calculator, or check the Total Cost of Student Loan Calculator for a single loan's full breakdown.