How much interest will i pay on a student loan

This Loan Payment Calculator computes an estimate of the size of your monthly loan payments and the annual salary required to manage them without too much financial difficulty. This loan calculator can be used with Federal education loans (Stafford, Perkins and PLUS) and most private student loans. (The loan calculator can be used to calculate student loan payments, auto loans or to calculate your mortgage payments.)

Table of Contents Show

Calculating Interest
Calculating Monthly Payments
Educational Loan Minimum Monthly Payments
Loan Payment Calculator
Comparing Loans
How to calculate student loan interest
Student loan interest calculator
Capitalization increases interest costs
When do I start accruing interest?
How student loan payments are applied
How do I calculate my student loan interest?
How much is a payment on a $50000 student loan?
How much interest is on a typical student loan?
Do student loans charge interest monthly?

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Calculating Interest

This loan calculator assumes that the interest rate remains constant throughout the life of the loan. Currently the 2020-2021 Undergraduate Federal Stafford Loan has a fixed interest rate of 2.75% (a record low) and the Federal PLUS loan has a fixed rate of 5.3%. (Perkins loans have a fixed interest rate of 5%.). The calculator can also be used for auto loans and mortgages.

Calculating Monthly Payments

The calculator also assumes that the loan will be repaid in equal monthly installments through standard loan amortization (i.e., standard or extended loan repayment). The results will not be accurate for some of the alternate repayment plans, such as graduated repayment and income contingent repayment.

Educational Loan Minimum Monthly Payments

Some educational loans have a minimum monthly payment. Please enter the appropriate figure ($50 for Stafford Loans, $40 for Perkins Loans and $50 for PLUS Loans) in the minimum payment field. Enter a higher figure to see how much money you can save by paying off your debt faster. It will also show you how long it will take to pay off the loan at the higher monthly payment.

Loan Fees

Loan fees are used to adjust the initial loan balance so that the borrower nets the same amount after the fees are deducted.

Loan Payment Calculator

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Comparing Loans

Need to compare several loans? Get the benefit of comparing loans (monthly payments, interests rates, loan terms, fitting your budget and what is best for you) when you use our Loan Comparison Calculator. Compare up to four loans at one time: Loan Comparison Calculator.

Learning how to calculate student loan interest will help you understand what you’re really paying for college debt. Interest on federal student loans and many private student loans is calculated using a simple daily interest formula.

To calculate the amount of student loan interest that accrues monthly, find your daily interest rate and multiply it by the number of days since your last payment. Then, multiply that by your loan balance.

How to calculate student loan interest

To see how to calculate student loan interest in practice, get out your pen and paper and follow along using the following example. Not a math person? Our student loan interest calculator below does the calculation for you.

For this example, say you borrow $10,000 at a 7% annual interest rate. On a 10-year standard repayment plan, your monthly payment would be about $116.

1. Calculate your daily interest rate (sometimes called interest rate factor). Divide your annual student loan interest rate by the number of days in the year.

.07/365 = 0.00019, or 0.019%

2. Calculate the amount of interest your loan accrues per day. Multiply your outstanding loan balance by your daily interest rate.

$10,000 x 0.00019 = $1.90

3. Find your monthly interest payment. Multiply your daily interest amount by the number of days since your last payment.

For a student loan in a normal repayment status, interest accrues daily but generally doesn’t compound daily. In other words, you pay the same amount of interest per day for each day of the payment period — you don’t pay interest on the interest accrued the previous day.

Student loan interest calculator

Capitalization increases interest costs

In most cases, you’ll pay off all of the accrued interest each month. But there are a few scenarios in which unpaid interest builds up and is capitalized, or added to your principal loan balance. Capitalization causes you to pay interest on top of interest, increasing the total cost of the loan.

For federal student loans, capitalization of unpaid interest occurs:

When the grace period ends on an unsubsidized loan.
After a period of forbearance.
After a period of deferment, for unsubsidized loans.
If you leave the Revised Pay as You Earn (REPAYE), Pay as You Earn (PAYE) or Income-Based-Repayment (IBR) plan.
If you don’t recertify your income annually for the REPAYE, PAYE and IBR plans.
If you no longer qualify to make payments based on your income under PAYE or IBR.
Annually, if you’re on the Income-Contingent Repayment (ICR) plan.

For private student loans, interest capitalization typically happens in the following situations, but check with your lender to confirm.

At the end of the grace period.
After a period of deferment.
After a period of forbearance.

To avoid interest capitalization, make interest-only student loan payments while you’re in school before you enter repayment and avoid entering deferment or forbearance. If you’re on an income-driven repayment plan for federal student loans, remember to certify your income annually.

When do I start accruing interest?

Student loan interest typically accrues daily, starting as soon as your loan is disbursed. In other words, student loans generally accrue interest while you’re in school.

Subsidized federal loans are the exception — the government pays the interest that accrues while the borrower is in school, so borrowers generally don’t have to start paying interest on subsidized loans until after the six-month grace period.

How student loan payments are applied

Student loan servicers typically apply payments in the following order:

Using the previous example, with a $116 monthly payment — and assuming no fees — $57 would go toward interest and $59 would go toward principal.

How do I calculate my student loan interest?

You first take the annual interest rate on your loan and divide it by 365 to determine the amount of interest that accrues on a daily basis. Say you owe $10,000 on a loan with 5% annual interest. You'd divide that rate by 365 (i.e., 0.05 ÷ 365) to arrive at a daily interest rate of 0.000137.

How much is a payment on a $50000 student loan?

With $50,000 in student loan debt, your monthly payments could be quite expensive. Depending on how much debt you have and your interest rate, your payments will likely be about $500 per month or more.

How much interest is on a typical student loan?

Data Summary. The current federal student loan interest rate for undergraduates is 4.99%. Unsubsidized and direct PLUS loans for graduate and professional students have fixed interest rates of 6.54% and 7.54%, respectively. Private student loan fixed interest rates are typically around 3.7-14%.

Do student loans charge interest monthly?

Monthly student loan payments include both interest and principal, like almost all loans. The monthly payments are applied first to late fees and collection charges, second to the new interest that's been charged since the last payment, and finally to the principal balance of the loan.