Student Loan Calculator
Project student loan repayment including in-school interest accrual and grace periods.
Inputs
Years of deferment before repayment begins.
Most federal loans include a 6-month grace period after graduation.
Monthly Repayment
$441.33
Balance at Repayment Start
$38,815.50
Original loan + capitalised deferment interest.
Deferred Interest Capitalised
$8,815.50
Total Interest Paid
$22,960.18
Total Amount Paid
$52,960.18
Step by step
Original loan amount
= $30,000.00
In-school + grace period
= 54 months
Interest accrued during deferment
$30,000.00 × 6.53% × (54 ÷ 12)
= $8,815.50
Capitalised at start of repayment — added to principal.
Capitalised principal at repayment start
= $38,815.50
Monthly payment
PMT($38,815.50, 0.5442%, 120)
= $441.33
Total interest over repayment
= $14,144.68
Total interest cost (including pre-repayment accrual)
= $22,960.18
How it works
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.
Formulas
Deferred interest (unsubsidised)
Deferred interest = Principal × annual rate × (deferment months / 12)
- P
- Original principal
- r_annual
- Annual interest rate as decimal
- t_defer
- Deferment period in months
Monthly repayment (on capitalised balance)
Monthly payment = (Principal + Capitalised interest) × monthly_rate / (1 − (1+r)^−n)
- r_m
- Monthly rate = annual rate / 12
- n
- Repayment months
Frequently Asked Questions
What is interest capitalisation and why does it matter?
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.
Can I avoid capitalisation?
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.
Which federal loans are subsidised?
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.
What about income-driven repayment plans?
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.