How to use this calculator
- Enter or choose amount borrowed.
- Enter or choose interest rate (per year).
- Enter or choose months until repayment starts.
- Enter or choose interest before repayment.
- Enter or choose repayment term.
- The monthly payment updates as you type. Use Copy result or Share to keep it.
Method
Accrued = B × rate × months ÷ 12 (simple interest); P = B + Accrued; Payment = P × r ÷ (1 − (1 + r)^−n); with extra payments the balance is paid down month by month at Payment + Extra
- B
- amount borrowed
- r
- annual rate ÷ 12
- n
- repayment term in months
Worked example
- Interest before repayment = 30,000 × 6% × 12 ÷ 12 = 1,800, so repayment starts at 31,800.
- Payment = 31,800 × 0.005 ÷ (1 − 1.005^−120) = 353.05 a month.
- Total repaid = 353.0452 × 120 = 42,365.42; interest = 42,365.42 − 30,000 = 12,365.42.
Borrowing $30,000 at 6% with a year before repayment means a $353.05 monthly payment over 10 years and about $12,365 of interest.
What the result means
Paying the interest while you are still studying stops it being added to the balance and lowers every later payment. After that, extra payments go straight to principal and shorten the loan.
Assumptions and limits
- A single loan with a fixed rate.
- Interest before repayment is simple interest, added to the balance once when repayment starts.
- A standard level-payment plan; extra payments go to principal.
- Income-driven repayment plans, forgiveness programmes and interest subsidies are not modelled.
- Rules differ by country and lender (for example, UK student loans are repaid as a share of income); check your loan terms.
Questions
What does capitalised interest mean?
Interest that has built up is added to the principal, so you then pay interest on it as well. It typically happens when a grace or deferment period ends.
Should I pay extra on student loans or invest?
Compare the loan’s rate with the after-tax return you could reasonably expect. Paying off a loan is a guaranteed return equal to its interest rate.
Sources
Please note: This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ.