Loan Repayment Modeling

The true cost of a degree is not the sticker price -- it is the total amount you pay over the life of your loans, including interest, under the repayment plan you actually use. Tuvelan models every major federal repayment option.

Repayment Plan Comparison

Federal student loans offer multiple repayment tracks, each with different monthly payments, total interest costs, and forgiveness eligibility. Tuvelan models all major options side by side:

10 yr

Standard Repayment

Fixed monthly payments over 10 years. Highest monthly payment but lowest total interest. The baseline against which all other plans are compared. For a $35,000 balance at 5.5%, expect ~$380/month and ~$10,600 total interest.

25 yr

Extended Repayment

Fixed or graduated payments over 25 years. Available for balances above $30,000. Reduces monthly payment by ~40% but roughly doubles total interest. Useful when cash flow matters more than total cost.

IDR

Income-Driven Repayment (SAVE/REPAYE/IBR/PAYE)

Payments capped at 10-20% of discretionary income. The SAVE plan (2024) caps undergraduate payments at 5% of income above 225% of the poverty line. Remaining balance forgiven after 20-25 years, with the forgiven amount potentially taxable as income.

PSLF

Public Service Loan Forgiveness

Tax-free forgiveness after 120 qualifying payments (10 years) while working for a qualifying employer. Must be on an IDR plan. For graduates entering public service, PSLF can reduce total loan cost by 50-70% compared to Standard repayment.

Debt-to-Income Analysis

The debt-to-income (DTI) ratio is the strongest predictor of loan stress and default. Tuvelan computes DTI for each school+major combination using College Scorecard median debt and earnings data:

DTI = (total_federal_debt + estimated_private_debt) / first_year_earnings

Financial advisors generally consider education DTI ratios in three bands:

DTI < 0.8

Manageable. Monthly payments under Standard repayment will be below 10% of gross income. Low default risk.

DTI 0.8-1.5

Stretched. IDR may be necessary to manage cash flow. Budget pressure in early career years. Moderate default risk.

DTI > 1.5

Distressed. Debt exceeds first-year earnings. Standard repayment is impractical. High default risk without IDR or PSLF.

Tuvelan flags any school+major combination with DTI above 1.5 as financially high-risk. Roughly 18% of all combinations in the College Scorecard data fall into this category, concentrated in arts, humanities, and social sciences at high-cost private institutions.

Default Probability by Major and Institution

College Scorecard reports 3-year cohort default rates (CDR) at the institution level. Tuvelan augments this with field-of-study analysis to estimate major-level default probabilities:

Institution CDR: Direct from Scorecard. Ranges from under 1% at selective institutions to over 15% at some for-profit and open-admission schools.
Major adjustment: Using the correlation between median earnings by field and institutional CDR across all schools that report both, we compute a CIP-code adjustment factor. Low-earning majors at high-CDR institutions have compounding risk.
Completion adjustment: Non-completers default at 3-4x the rate of completers. The school’s completion rate by field (from IPEDS) is factored into the expected default probability.

Default is not just a financial event -- it triggers wage garnishment, credit score damage, tax refund seizure, and loss of future federal aid eligibility. Tuvelan incorporates these downstream costs into the worst-case scenario within the Monte Carlo simulation.

Forgiveness Timeline Modeling

For borrowers on IDR or PSLF tracks, the forgiveness timeline and forgiven amount are critical variables. Tuvelan projects the full amortization schedule under each plan:

IDR forgiveness (20-25 years): We project income growth using Monte Carlo draws, compute the annual IDR payment, and track the remaining balance through negative amortization (when payments do not cover interest, the balance grows). The forgiven balance and its tax liability are included in the total cost.
PSLF forgiveness (10 years): We identify qualifying employers by NAICS code and compute the probability of maintaining qualifying employment for 120 consecutive payments. The expected PSLF benefit is the forgiven balance weighted by the employment continuity probability.
Tax bomb: Under current law, IDR-forgiven balances are taxable as ordinary income (PSLF is tax-free). For a $150,000 forgiven balance, the tax liability can exceed $40,000. Tuvelan includes this in the total cost projection and flags it prominently.

Monthly Payment Projections

Beyond total cost, month-to-month cash flow determines whether a repayment plan is livable. Tuvelan projects monthly payments under each plan for the first 10 years post-graduation, accounting for:

Income Growth

IDR payments rise as income grows. A $200/month IDR payment in year 1 may become $450/month by year 5 as salary increases. We model this using the same Mincer curves as the NPV calculation.

Family Size

IDR payments adjust for household size (affects the poverty line threshold). Users can input expected family size changes to see the impact on payments.

Interest Subsidy

The SAVE plan subsidizes unpaid interest on subsidized loans. This prevents negative amortization for many borrowers and significantly reduces total cost versus older IDR plans.

Refinancing Option

For borrowers not pursuing forgiveness, Tuvelan models the break-even point for refinancing to a private lender at lower rates, forfeiting IDR/PSLF eligibility in exchange for reduced total interest.

API Endpoint

Loan repayment projections are included in the full calculation response. Specify the loan parameters to get plan-by-plan comparisons.

POST/v1/calculate

curl -X POST https://tuvelan-api.smarttechinvest.com/v1/calculate \
  -H "X-API-Key: tuv_your_api_key_here" \
  -H "Content-Type: application/json" \
  -d '{
    "institution_id": 243780,
    "major_cip": "51.3801",
    "loan_amount": 45000,
    "loan_rate": 0.055,
    "family_size": 1,
    "include_loan_plans": true,
    "include_pslf": true
  }'

The response includes loan_standard, loan_extended, loan_idr, and loan_pslf objects, each containing monthly_payment, total_paid, total_interest, forgiven_amount, and dti_ratio.