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Student loan interest calculator

Follow these steps to find out how much your loans will cost you each month.

Updated

You can calculate how much interest you’ll have to pay on your student loans each month by using the simple interest formula. Knowing this can help you understand your loan cost a little better. It can also give you an idea of how signing up for certain repayment plans or forbearance could make your loan more expensive in the long run.

4 steps to calculate your student loan interest

Follow these steps to calculate how much interest you’ll pay in a month of repaying your student loan on a standard repayment schedule.

Step 1: Identify key numbers.

You’ll need to know the following numbers before you get started:

  • Interest rate or APR. This is the percentage you’ll pay on your balance over a year. If you have a private loan, the APR is often the same as interest.
  • Loan balance. This is the amount you currently owe on your student loans — not the amount you borrowed.

You can typically find these in your loan documents or by logging on to StudentLoans.gov or your servicer’s website.

Step 2: Find your interest rate factor.

Your interest rate factor, also known as the daily interest rate, is the percentage of your balance your lender charges in interest each day.

Follow these steps to find your interest rate factor:

  1. Convert your interest rate into a decimal by dividing the percentage number by 100.
  2. Divide the result by 365 — or 366 if it’s a leap year.

For example, if your interest rate is 6%, here’s how you’d find the interest rate factor:

  1. 6/100 = 0.06
  2. 0.06/365 = 0.00016438356, or approximately 0.00016

Step 3: Calculate the daily interest.

Multiply the interest rate factor by the current balance of your loan.

If you had a $30,000 balance on a loan with a 6% interest rate, here’s how you’d calculate the daily interest:

  • 30,000 x 0.00016 = 4.8

This means you gain $4.80 in interest per day this month on your loan balance.

Step 4: Calculate the monthly interest.

Multiply your daily interest cost by the number of days in the current month.

Say you’re calculating loan payments for January, which has 31 days. Here’s how you’d find your monthly interest charge:

  • 4.8 x 31 = 148.8

Your total interest cost would be $148.80 for that month.

Calculate monthly payments and total interest cost

Use the calculator below to calculate the full monthly payment on your student loan and find out how much interest you’ll pay overall. In addition to the loan balance and interest rate, you’ll also need to know the remaining loan term, which is the amount of time you have left on your loan.

How much will I pay on an income-driven repayment plan?

Interest continues to add up the same way it does with standard repayments when you sign up for an income-driven repayment (IDR) plan. However, you might not pay the full interest amount — or any at all. That’s because your repayments are based on your income, not your balance or interest cost.

Check out our guide to income-driven repayment plans to learn how to calculate your repayments — or use the repayment calculator on StudentLoans.gov.

When does interest start adding up on my student loans?

On most student loans, interest starts adding up as soon as the lender sends the funds to your school. There are two exceptions, and both are federal student loans:

  • Direct Subsidized Loan. Interest doesn’t start adding up until six months after you drop below half-time enrollment, graduate or otherwise leave school.
  • Perkins Loans. Interest starts accruing nine months after your drop below half-time enrollment, graduate or otherwise leave school.

If you don’t have these types of loans, you might want to consider making payments to cover interest while you’re in school — at a minimum. Otherwise, that unpaid interest can increase your total loan cost.

How much interest adds up during the grace period?

You can calculate how much interest accrues while you’re in school and during your grace period with these steps:

  1. Figure out the number of days between when your school received your loan and the end of your grace period.
  2. Calculate the daily interest cost by following the first few steps above.
  3. Multiply that by the number of days you found in Step 1.

Let’s take a look at an example …

Say your school received the loan on September 21, 2018 and your first repayment is due November 6, 2020. That’s a total of 777 days.

If you had the same balance and interest from the example above, you’d have a daily interest cost of $4.80.

Multiply $4.80 by 777 and you get a total interest cost of $3,729.60.

6 moves that can make a loan more expensive

Avoid the following moves as much as you can if you want to save on your student loan cost:

  • Waiting to make repayments until your grace period is up. Unless you have a Direct Subsidized or Perkins Loan, all that interest that adds up while you’re in school and during your grace period gets added to your loan balance.
  • Going into forbearance. Interest continues to add up while your loans are paused and gets added to your loan balance when repayments resume.
  • Deferring private and Direct Unsubsidized Loans. While interest pauses on Direct Subsidized and Perkins Loans during deferment, it works the same as forbearance for all other types of loans.
  • Extending your loan term. The longer you take to repay your loan, the more time there is for interest to add up — even though your total monthly repayment might be lower.
  • Leaving an IDR plan. If your income-driven repayments didn’t cover interest each month, the interest you owe gets added to your loan balance when you switch to another plan.
  • Signing up for the Income-Contingent Repayment Plan. With this IDR plan, any interest your repayments didn’t cover gets added to your loan balance each year.

In general, you should avoid not paying your full interest due each month. That’s because any unpaid interest gets added to your loan balance once you start making regular repayments again — which is called interest capitalization. A larger balance means you’ll have a higher monthly interest cost, which increases the total cost of your loan.

Can I deduct interest payments on my taxes?

Possibly. Depending on how much you make, you might be able to deduct up to $2,500 in interest payments from your personal taxes each year. However, you might not qualify for the deduction if your income is too high. You can learn more about how it works by reading our guide to student loan tax deductions.

Bottom line

Calculating your monthly interest and total cost can help you understand how your loan works. It can also help you avoid taking steps that would kick in interest capitalization and increase your total loan cost.

You can learn more about how it all works by checking out our guide to student loans.

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