Project student loan repayment including in-school interest accrual and grace periods.
Federal unsubsidised student loans accrue interest from the disbursement date, even while you're in school and during the 6-month post-graduation grace period. That interest is then capitalised — added to your principal — before your first repayment begins. On a $30,000 loan at 6.53% with a 4-year in-school period and 6-month grace, capitalised interest alone adds roughly $8,000 to the balance you actually repay. Subsidised loans avoid this by having the government pay deferment interest.
Deferred interest (unsubsidised)
Deferred interest = Principal × annual rate × (deferment months / 12)
Monthly repayment (on capitalised balance)
Monthly payment = (Principal + Capitalised interest) × monthly_rate / (1 − (1+r)^−n)
Capitalisation means unpaid interest is added to your principal balance. You then owe interest on a larger amount — interest on interest. On a 4-year degree with a 6.5% unsubsidised loan, capitalisation can increase your repayment balance by 28% before you make a single payment.
On unsubsidised loans, you can make interest-only payments while in school. Even small monthly payments prevent accrual from compounding. This calculator models the default scenario (no in-school payments); paying any interest in school reduces the capitalised balance.
Direct Subsidised Loans are available to undergraduate students demonstrating financial need. Graduate students and most professional programs use unsubsidised loans exclusively. Private student loans are always unsubsidised.
IBR, PAYE, SAVE and similar plans cap payments at a percentage of discretionary income and may forgive the remainder after 20–25 years. This calculator models the standard fixed repayment plan — use the Federal Student Aid Loan Simulator for IDR plans.