Private vs Federal Student Loan Calculator
The two loans, side by side
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the amount you need to borrow — the gap left after federal loans and grants, which is the only amount a private loan should ever cover. The example uses $30,000.
- 02
Enter the private lender's fixed rate and term as quoted to you. The example uses 9.5% over ten years. This page prices fixed rates only, because a variable rate can rise and cannot be compared honestly against a fixed federal one.
- 03
Add any percentage fee the private lender charges, and the months of on-time payments it says it requires before it will consider releasing a cosigner. Both come from the lender's own disclosure, not from any law.
- 04
Leave the federal term at 0 to use the term the balance sets under the tiered standard plan. For $30,000 that is fifteen years. The federal rate and fee are already filled in from the Federal Register and Federal Student Aid.
- 05
Enter the income you expect in your first year out of school, then read both totals together with the RAP payment underneath. The point of the page is that the cheaper loan on paper may still be the worse deal.
Formula
Both loans are priced on the same amount borrowed, so the comparison is like for like. Monthly payment = P x i ÷ (1 − (1 + i)^−n), where P is the amount borrowed, i is the annual rate divided by twelve and n is the number of months. Total cost = monthly payment x n, for each loan separately. The difference = the private total − the federal total. A negative result means the private loan is cheaper across the whole term. The federal term, when left at 0, comes from the tiered standard plan under 34 CFR 685.208(c)(1): ten years under $25,000, fifteen to under $50,000, twenty to under $100,000 and twenty-five at $100,000 or more. A $50 monthly minimum applies. What reaches the school = amount borrowed x (1 − the fee). The federal fee is 1.057%; most private lenders charge none. The federal income-driven payment uses the Repayment Assistance Plan formula in Public Law 119-21: an annual base of a flat $120 at or below $10,000 of adjusted gross income, then 1% of income rising by one point per $10,000 band to 10% above $100,000, divided by twelve, less $50 for each dependent, with a $10 monthly minimum. This page assumes no dependents.
Example
A student needs $30,000 that federal loans and grants do not cover. A private lender quotes 9.5% fixed over ten years with no fee. The federal alternative is 6.52%, the 2026-27 undergraduate rate, with a 1.057% origination fee, and $30,000 falls in the band that gives a fifteen-year standard term. The student expects to earn $55,000 in their first year out of school. The private loan costs $388 a month and $46,583 in total, of which $16,583 is interest. The federal loan costs $262 a month and $47,099 in total, of which $17,099 is interest. On those numbers the private loan is $516 cheaper across the full term — but it costs $127 more every month, because it is being repaid five years faster. The private loan clears in year ten; the federal one runs to year fifteen. Now price the protections. At $55,000 of income the Repayment Assistance Plan would ask $229 a month, which is $159 less than the private payment every month of that first difficult year. Interest that an on-time RAP payment does not cover is never charged, so the federal balance cannot grow while payments are being made. After 360 qualifying payments whatever remains is cancelled. None of that exists on the private side, and the private loan can never be moved onto it. Rerun with a private rate of 6.0% and the private loan costs $39,967 against the federal $47,099, a real saving of $7,132. That is the honest version of the trade: a genuine saving, set against protections worth $104 a month at this income and a door that closes for good.
Definitions
- Repayment Assistance Plan (RAP)
- The income-driven federal plan created by Public Law 119-21 for loans made on or after 1 July 2026. The payment is a percentage of adjusted gross income, less $50 per dependent, with a $10 minimum, and the balance is cancelled after 360 qualifying monthly payments.
- Interest waiver
- Under RAP, interest that an on-time payment does not cover is not charged to the borrower, so the balance cannot grow while payments are made. Private loans have no equivalent.
- Cosigner release
- A lender's policy allowing a cosigner to be removed after a period of on-time payments. It is offered at the lender's discretion, usually with a credit and income test, and can be declined. It is not a legal right.
- Total and permanent disability discharge
- The cancellation of a federal student loan when the borrower is found totally and permanently disabled. It is statutory for federal loans, and permanently tax-free since 2026. A private lender offers it only by its own policy, if at all.
- Fixed rate
- A rate set for the life of the loan. Every federal Direct loan is fixed by statute each year; a private loan may be fixed or variable, and a variable rate can rise after you sign.
Good to know
Two products that only look like the same thing
Set a private student loan and a federal one side by side and they appear to be the same product at different prices: a sum of money, a rate, a term, a monthly payment. Comparing them on rate alone is the most common and most expensive mistake in student borrowing, because the two are not the same instrument. A federal Direct loan is a statutory entitlement with terms written in law and identical for every borrower in the country. There is no credit check for a subsidized or unsubsidized loan, no cosigner, no pricing by risk: a student with no credit history and a student with excellent credit receive exactly the same rate, 6.52% for undergraduates in 2026-27, set by a formula tied to a Treasury auction and capped by statute. A private loan is a commercial contract, priced to the borrower's risk and, in almost every case for an undergraduate, to a cosigner's credit. The worked example shows how the price comparison can mislead even when it is arithmetically correct. At 9.5% over ten years a $30,000 private loan costs $46,583 in total; the federal loan at 6.52% over the fifteen-year standard term its balance produces costs $47,099. The private loan appears $516 cheaper. But it is only cheaper because it is repaid five years faster, and it costs $127 more every month to achieve that — $388 against $262. Shorten the federal term to ten years and the federal loan wins outright on price. This is why the page reports both totals and both terms rather than a single verdict, and why the terms deserve as much attention as the rates. A fair comparison holds the term constant, or at least states plainly which loan is being repaid faster. Once that is done, the remaining question is what each product carries besides its price, and that is where the two genuinely diverge.
Pricing the protections, not just the rate
The federal side of this comparison carries four things a private loan has no reliable equivalent of, and the useful exercise is to put numbers on them rather than list them. The first is an income-driven payment. Under the Repayment Assistance Plan created by Public Law 119-21, the payment is a percentage of adjusted gross income — a flat $120 a year at or below $10,000, then 1% rising by a point per $10,000 band to 10% above $100,000 — less $50 for each dependent, with a $10 monthly minimum. At the $55,000 income in the worked example that is $229 a month, against $388 on the private loan: $159 a month of difference in the first year out of school, which is exactly when money is tightest and when a new graduate is most likely to be between jobs or underpaid. The second is the interest waiver that comes with it: interest that an on-time RAP payment does not cover is not charged to the borrower at all, so a federal balance cannot grow while payments are being made. Anyone who watched balances balloon under older income-driven plans will recognize how large a change that is. The third is discharge on death or total and permanent disability, which is statutory for federal loans and, since 2026, permanently tax-free. The fourth is cancellation of whatever remains after 360 qualifying monthly payments. Against all of that, the worked example's private loan offers a $516 saving. Even at a genuinely low private rate of 6.0%, where the saving rises to a real $7,132, the protections are worth $104 a month at that income and the cancellation and discharge provisions still have no private counterpart. None of this means a private loan is never right. It means the comparison should be stated honestly: a certain saving now, against insurance whose value depends on how the next thirty years go.
The cosigner, and the release that may never come
Almost every private student loan made to an undergraduate requires a cosigner, because most eighteen-year-olds have neither income nor credit history. Families tend to treat this as a formality, and it is not. A cosigner is not a character reference; they are a second borrower, equally liable for the full balance from the day the loan is made. The debt appears on the cosigner's credit report, counts against them in every debt-to-income calculation a lender performs, and if the student misses payments, the missed payments damage the cosigner's credit as well as the student's. If the student dies, many private lenders will pursue the cosigner for the balance, which is the single most distressing outcome in this whole area and one that federal loans, with their statutory death discharge, cannot produce. Lenders advertise cosigner release as the answer, and this page carries a field for it precisely because the terms vary so much. The important thing to understand is that release is the lender's own policy and not a legal right. The lender sets the criteria, which typically include a minimum number of consecutive on-time payments, a fresh credit check on the student alone and an income test, and the lender may decline an application that meets all of them. A missed or even a late payment can reset the clock. Some lenders have quietly narrowed their criteria over time, and a policy described in marketing material when the loan was taken is not a contractual guarantee years later. The practical steps are straightforward. Ask for the cosigner release criteria in writing before signing. Ask specifically what happens to the cosigner if the student dies or becomes disabled. Set up automatic payments so that no late payment can ever reset the count. And treat the cosigned amount as debt both people carry, because until the lender agrees otherwise, that is precisely what it is.
A door that opens only one way
The most important structural fact in this comparison is not about money at all, but about the order in which choices can be made. A federal loan can be refinanced into a private loan at any point in its life. If in five years you have a stable job, a good credit score and a private lender offering a materially lower rate, that option is open to you and always will be. A private loan can never travel in the other direction. There is no consolidation into a federal loan, no conversion, no hardship provision and no exception. Whatever protections the federal system offers later — and the system has been rewritten twice in a decade — a private borrower is outside them permanently. This asymmetry is the whole argument for exhausting federal borrowing first, and it holds even when the private rate is lower today. Taking the federal loan now preserves both options: you keep the income-driven plan, the interest waiver, the discharges and the cancellation, and you retain the right to refinance away from them if your circumstances make that sensible. Taking the private loan now spends an option you cannot buy back, in exchange for a saving calculated from a rate you are being quoted at the single moment in your life when you have the least bargaining power. The correct use of a private loan follows from that. It is the instrument for the gap that remains after federal limits are exhausted, and the federal limits are fixed by law rather than by need: a first-year graduate student facing a $62,000 cost of attendance with $12,000 of grants can borrow only $20,500 federally, and $29,500 has to come from somewhere. In that position the question is not private versus federal but private versus not attending. If you reach it, borrow the smallest amount that closes the gap, take the shortest term you can genuinely afford, and get every lender policy you are relying on in writing before you sign.
Frequently asked questions
Is a private student loan cheaper than a federal one?
Sometimes on paper, and the example shows how misleading that can be. At 9.5% over ten years a $30,000 private loan costs $46,583 in total; the federal loan at 6.52% over the fifteen-year standard term costs $47,099. The private loan looks $516 cheaper — but only because its term is five years shorter, and its monthly payment is $388 against $262. Compare the totals and the terms together, and remember the federal loan carries protections the private one does not.
What happens if the private rate really is much lower?
The saving grows, and so does what you give up. Run the same $30,000 at 6.0% over ten years and the private loan costs $39,967 against the federal $47,099 — a genuine saving of $7,132. Against that, at $55,000 of income the federal Repayment Assistance Plan would ask $229 a month where the private lender wants $333, a difference of $104 every month in the year money is tightest, and the private loan can never be moved onto that plan.
Can a private loan be converted to a federal one later?
No, and this is the single most important asymmetry. A federal loan can be refinanced into a private loan whenever you like. A private loan can never be moved into a federal plan — there is no consolidation, no conversion and no exception. Taking the federal loan first keeps both doors open, because you can still refinance privately later if your credit and income improve. Taking the private loan first closes the federal door permanently.
What exactly do I give up by borrowing privately?
Four things with no reliable private equivalent. An income-driven payment under the Repayment Assistance Plan, which on $55,000 of income would be $229 a month in the example. The interest waiver that comes with it, under which interest an on-time payment does not cover is not charged at all, so the balance cannot grow while you pay. Discharge if you die or become totally and permanently disabled, which is written into the statute. And cancellation of whatever remains after 360 qualifying monthly payments.
Will my cosigner be released after two years of payments?
Only if the lender agrees. Cosigner release is the lender's own policy, not a legal right, and the months entered on this page are whatever the lender advertises. The lender sets the criteria, can require far more than on-time payments — a credit check and an income test are common — and can decline. Until it agrees, the debt sits on the cosigner's credit report and counts in their debt-to-income ratio. Ask for the written criteria before you rely on it. Federal student loans need no cosigner at all.
Do private loans get discharged if the borrower dies?
Some do and some do not, because no law requires it. A federal loan is discharged on the death or total and permanent disability of the borrower, and since 2026 such a discharge is permanently tax-free. A private lender may offer a death discharge as a matter of policy, or may pursue the estate, or may pursue a cosigner. Ask for the policy in writing and read specifically what happens to the cosigner, because that is where families are caught out.
When does a private loan actually make sense?
When federal borrowing is exhausted and the gap still has to be filled. Federal limits are fixed by law and often fall short of what a school costs — a first-year graduate student facing $62,000 with $12,000 of grants can borrow only $20,500 federally. In that position the choice is not private versus federal but private versus not going. Even then, borrow the smallest amount that closes the gap, take the shortest term you can actually afford, and get the cosigner release criteria in writing first.