I have a question regarding standard (or 'level') debt repayment plans, specifically for my student loans. Hoping someone might have some insight.

"Standard repayment is a level payment plan, with up to 120 fixed monthly payments during a repayment term of up to 10 years."

"Borrowers save money by paying less interest over a standard repayment term because standard repayment offers the shortest repayment term."

Can anyone elaborate on exactly how interest is applied?


Thanks to everyone who answered and commented. I took the advice you gave. Turns out, simply, interest on the principle is calculated every night and applied to the principle. Thus, yes, the more the principle is paid off (every month), the less is due the next payment. There is no amortisation.

  • That is curious, typically it follows a standard amortization schedule where, like you said, the portion to interest decreases with each payment. It could be that they have just evenly divided the interest across the 120 payments. What is the interest rate and starting balance?
    – Hart CO
    Jan 19, 2018 at 6:02
  • So you are saying it's like a different version of an amortized loan? I am starting to think they do evenly divide interest across the 120 payments...which would mean that question #4 is huge. Each extra payment could save me $500?? I am up to 6% interest, starting balance was 140K. :( Jan 19, 2018 at 6:04
  • I've never encountered such a thing, the government calculator clearly amortizes for the standard plan, the results match a mortgage calculator. studentloans.gov/myDirectLoan/mobile/repayment/… Average monthly interest is ~$387, so $500 doesn't really make sense in any case, 2 months around payment 42/43 where it'd be ~$500. Very odd, follow up with your loan servicer.
    – Hart CO
    Jan 19, 2018 at 6:28
  • I would guess (from the link in the question) that this is in the US, but you probably should add an appropriate country tag to confirm this.
    – TripeHound
    May 18, 2018 at 8:06
  • I think you should revert the last edit and make "Turns out, simply, interest ..." a self-answer.
    – RonJohn
    May 18, 2018 at 16:48

1 Answer 1


I assume you are looking at the website for your payment history; let's assume it's wrong for now. Instead I would double check the terms of Master Promissary Note (MPN) (the agreement you signed for your student loans). It will probably contain the clues necessary to answer all 5 of your questions.

If what you are saying is true about the payment allocation not changing, it sounds like you may have some type of non-amortizing loan. However the link you gave was describing Federal student loans. I am 99.99% sure all Federal loans are amortized.

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