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2022 Student Loan Interest Tax Rate Calculator

The student loan interest tax deduction can be tricky to calculate, so we created this calculator to help current and former students estimate the value of their student loan interest deductions along with their average tax rate, tax bracket & marginal tax rate for the current tax year. This calculator is for tax year 2022 with payments due in April 2023. We also offer student loan tax deduction calculators for 2018 & 2019. Click here for the current year calculator.

The High Cost of Repaying Student Loans

Similar to graduating college, acquiring a hefty amount of student loans has become almost a rite of passage for many young Americans as education costs continue to soar. More and more college graduates are struggling as they try to figure out how to repay these loans. Since having a college degree has become more of necessity, it seems that this issue will continue to be a common plight for young professionals.

The current economy in the United States is reliant upon consumer driven spending. Individuals with higher amounts of school loans are often trapped in a monthly cycle of spending a large percentage of their income to pay these prices down, with little money left over for necessities like housing and food. They are unable to cover their payments in addition to other bills, and this issue has had an effect on other areas of their lives including whether to get married or have children. As a result, paying off education related loans as quickly as possible has become more important than ever.

Rising Education Costs

The price for a college education has risen steadily as state funding has decreased. Due to tuition hikes and rising costs for housing, books, meals, and other essentials, the student loan debt in America has accumulated to a staggering $1.3 trillion. The average bachelor degree educated individual carries a loan debt of $37,172 upon graduation. As the need to have a degree continues, so will costs.

Student Loan Statistics

The statistics for student loan debt are very grim. Over 70 percent of college students graduate with debt. Unfortunately, U.S. educational costs will only continue to rise. Here’s a closer look at these frightening debt statistics.

United States Loan Statistics Overview

  • Total Student Loan Debt: $1.3 Trillion
  • Total number of borrowers with debt:44.2 million
  • Deliquency/default rate: 11.2 percent
  • Increase in debt during 2016: $3.1 billion
  • Amount of money in new delinquent balances (more than 30 days late): $32.6 billion
  • Amount of money classified as seriously delinquent balances (more than 90 days late): $31 billion

Average Student Loan Amounts at Graduation in 2014 & 2017 by State

State 2014 Avg 2017 Avg Debt Rank % With Debt
Alabama $29,425 $31,899 8 50%
Alaska $26,742 $25,682 40 46%
Arkansas: $22,609 $26,799 34 55%
Arizona $25,344 $23,967 44 54%
California $21,382 $22,785 46 50%
Colorado $25,064 $26,530 36 52%
Connecticut $29,750 $38,510 1 57%
Delaware $33,808 $34,144 5 62%
Florida $24,947 $24,041 43 50%
Georgia $26,518 $28,653 25 57%
Hawaii $24,554 $25,125 42 49%
Idaho $26,091 $26,675 35 61%
Illinois $28,984 $29,214 24 61%
Indiana $29,222 $29,561 22 57%
Iowa $29,732 $29,859 20 63%
Kansas $29,732 $27,720 29 59%
Kentucky $25,939 $28,447 27 64%
Louisiana $23,025 $27,210 31 48%
Maryland $30,908 $29,314 23 56%
Maine $27,457 $31,364 10 56%
Massachusetts $29,391 $32,065 7 59%
Michigan $29,450 $31,289 11 58%
Minnesota $31,579 $31,734 9 68%
Mississippi $26,177 $30,439 18 58%
Missouri $25,844 $27,108 32 58%
Montana $26,946 $28,466 26 59%
Nebraska $26,278 $25,750 39 54%
Nevada $20,211 $22,064 48 49%
New Hampshire $33,410 $34,415 4 74%
New Jersey $28,318 $32,247 6 61%
New Mexico $18,969 $21,237 49 54%
New York $27,822 $30,931 13 60%
North Carolina $25,218 $26,526 37 57%
North Dakota $23,445 - - -
Ohio $29,353 $30,629 17 62%
Oklahoma $23,430 $25,952 38 49%
Oregon $26,106 $27,885 28 56%
Pennsylvania $33,264 $36,854 2 67%
Rhode Island $31,841 $36,250 3 64%
South Carolina $29,163 $30,891 14 58%
South Dakota $26,023 $31,275 12 74%
Tennessee $25,510 $25,252 41 56%
Texas $26,250 $26,824 33 54%
Utah $18,921 $18,838 50 38%
Vermont $29,060 $30,651 16 60%
Virginia $26,432 $29,887 19 56%
Washington $24,804 $23,936 45 52%
Washington DC - $30,775 15 46%
West Virginia $26,854 $27,505 30 74%
Wisconsin $28,810 $29,569 21 64%
Wyoming $23,708 $22,524 47 47%

(via College Insight, 2016 & 2019)

A Look at Student Loan Borrowers by Balance

What the previous numbers tell us, is the average amount of loans per student in each state. Even more harrowing, is the fact that there are many students with balances much higher upon graduation. Most student’s, approximately 12.4 million, fall into the category of carrying a loan balance of $10,000 to $25,000. More than 42 million student borrowers have accrued a loan balance of up to an amount of $100,000. Over 2 million student loan debt holders carry balances over the price of $100,000. Of those 2 million, over 400,000 owe amounts greater than $200,000.

The astronomical values owed by new graduates are not only hurting themselves but the American economy as well. Young professionals are struggling to pay these amounts and are unable to make big purchases like a home or a new vehicle. Many are left with no idea of how to chip away at these overwhelming balances. As educational costs continue to skyrocket there seems to be little hope that students will be able to stop acruing so much debt while in college.

Moving Forward and Out of Debt

Student Debt.

Being proactive in paying off student debt takes dedication. It's imperative to consider all options for repayment. After looking at the different options, making and sticking to a plan is paramount to gaining control of your financial situation. Since student loan debt is considered “good debt” according to many financial advisers since it helps to secure a better future, so as opposed to credit card debt or auto loans, you can choose a longer term repayment plan.

Loan Consolidation and Refinancing

Consolidating and refinancing the loans is an excellent way to tackle paying them off quicker. The main goal of refinancing your balances is to decrease the interest rates. This means that more of each payment goes towards paying down the principal loan amount, rather than the interest. By consolidating the loans, you can send just one monthly payment rather than several.

Choosing a Repayment Plan

If you fail to plan and choose a repayment plan, you will be placed into the standard ten-year plan. While this is fine for many people, your individual needs and ability to make payments may vary. By visiting, you can look at the different plans available. You can also apply for an income driven repayment plan, which takes your income and ability to make monthly payments into account. By choosing this option, you can often lower the amount due monthly, into a far more manageable payment. However, this will increase the amount of time you will spend paying the money back.

Income Based Repayment Plans

The Income Based Repayment plan, as mentioned above, is an easy and common way that borrowers can look into if they are experiencing financial hardship. Based on when you took the loans out originally, you can be enrolled in a plan that allows you to make payments for 20 or 25 years, at which point, the loans will be forgiven. In most cases, the loan payment will not go over 10 percent of your discretionary income.

(Revised) Pay as You Earn Repayment Plan

The Pay as You Earn Repayment Plan is similar in many ways to the income based repayment plan. You won’t be expected to pay over ten percent of your discretionary income, and the loan is forgiven in 20 years. The difference with this option is that loans that qualify go back to 2007. For loan borrowers with loans after 2015, this plan has been retooled and renamed the Revised Pay as You Earn Repayment Plan. In this case, an interest subsidy is included which assists you in covering up to 50 percent of the interest in situations where the new payments cannot keep up with the amount of interest accruing.

Income Contingent Repayment Plan

The Income Contingent Repayment Plan differs slightly from the income based repayment plan and the pay as you earn repayment plans. There is no income guideline for this plan, and any eligible person can take advantage of this plan. With this offer, the payments will be lesser than either 20 percent of your discretionary income or what you would normally pay with a plan with a fixed payment over the course of 12 years, adjusted for your particular income.

Making Higher Payments

If you find while budgeting your monthly finances that you can afford to make a larger payment than usual, you should. This extra money will go towards paying down the principal loan amount. This is helpful, but may not always be a realistic solution for those struggling to make even the minimum payment.

Circumstances in Which Student Loans Can Be Forgiven, Canceled or Discharged

Under normal circumstances, you must repay your loan debt no matter what. So, if you do not finish your degree or cannot find work, you’ll still be required to pay back the borrowed money. However, this is not always the case.

  • Individuals that gain employment in the public service sector, volunteer with organizations like the Peace Corps, or that work in certain industries such as health care or teaching may be eligible for loan forgiveness
  • You may be eligible for a discharge of loans if the school you are attending closes, thus preventing you from finishing your degree
  • Loans can be discharged in cases of total and permanent disability, death, unpaid refund, false certification by your school, and some other situations

The specifics of these conditions can be found here.

Filing Bankruptcy and the Effect on Loans

Thanks to federal laws and regulations, student loans are challenging to have discharged during a bankruptcy. The process will also have a severely negative impact upon your credit and can cost you a lot of money in legal fees. You will need to prove that repaying the loans would cause you undue hardship and that you are unable to repay them back. This means that you’ll be stuck proving in court that you would not be able to maintain a basic standard of living were you to repay the loans. Also, you will need to show that you will continue to experience financial hardship for most of your repayment period (20 years or so) and that you have in good faith attempted to repay your loans.

Defaulting on Student Loans

There comes a time in almost every person's life where they just cannot afford to pay all of their bills one month. Beyond just being late on loan payments, student loan default occurs when borrowers are financially unable to meet their debt obligations. As soon as one payment is late, the loan is considered delinquent. This is often the first red flag for both the borrower as well as the lender. Once the late payment reaches the 90-day mark, the delinquent status gets reported to the three main credit bureaus, and a negative mark is added to your credit report. If the loan is left unpaid for 270 days, it is considered to be in default. The debt then goes into to collections.

The Repercussions for Defaulting

The immediate ramifications of defaulting on your student loan include:

  • Losing any eligibility for being enrolled into a loan forgiveness plan
  • Your credit score will become lower
  • Once the account is sent to collections, you will be charged additional fees
  • The IRS can seize your tax refund and apply it towards your owed balance
  • Your paycheck could be garnished to recoup money towards the owed amount
  • The government could potentially sue you
  • You could receive much higher interest rates as a consequence of your credit score being lowered, a consequence that can haunt you for years and years to come

What to Do if Facing the Possibility of Default

The first important advice is not to panic. Even though it can be tempting to ignore the problem and hope it will go away, you need to face it head on and deal with it appropriately. Talk to the lender and ask if there are any repayment programs that will help you be able to make your payments. As mentioned previously, there are several plans to help borrowers that are struggling to make their payments.

If you have already defaulted on loans, the best course of action is taking action immediately. Speaking to the lender or the collection agency can help you to find a solution. You may be able to negotiate a repayment program based on your current salary, consolidate the loans, or even a federal loan rehabilitation program. The imperative thing is to be proactive and speak with the company to find a solution.

Debt is the New Slavery.

Student Loan Repayment Calculators

The use of a student loan calculator will aid you in determining on long it will take to finish paying off your student loan debt. You can enter in your loan balance and get an idea of what your monthly payments will be. You can also examine how making extra payments or refinancing your interest rate can affect your payments.

Student loan payment calculators also offer insight into the annual salary you will need to earn to manage payments without too much financial difficulty. Student loan calculators can be used to examine your budget for Federal education loans including Stafford, Perkins, and PLUS loans as well as most private student loans.

Most loan calculators process your loan information based on the assumption that the interest rate will remain static throughout the repayment period of your loan. The calculator also assumes that you will be making the same payment each month. Some educational loans have different interest rates, so it is imperative to know what your specific rate is as this can have a huge effect on your monthly payment.

In closing, student loan repayment is expensive, difficult, and usually overwhelming. By choosing an appropriate repayment plan and working hard at chipping away at the debt, while exploring other options like forgiveness, you can get back to a lower debt amount. Remember that these loans are considered a “good” type of loan debt, so a longer repayment period isn't necessarily the worst thing for you and your credit. The best plan is to be aware of your financial situation and make a budget and course of action to eliminate your loan debt. It will take time and dedication, but it will be worth the effort.

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