Student Loan Interest Calculator
See exactly how student loan interest accrues, from the daily charge to what builds up while you're in school, and what the loan costs in total.
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Student loan interest is charged every single day, and it often keeps building while you’re still in school. That makes it easy to owe more than you borrowed by the time repayment starts. This calculator shows the daily and monthly interest on your loan, how much will build up before your first payment, your monthly payment, and the total interest over the life of the loan.
How to use the student loan interest calculator
- Enter your loan balance and interest rate.
- Enter the months until repayment starts: time left in school, your grace period, or a deferment. Use 0 if you’re already repaying.
- Choose whether unpaid interest is added to the balance (capitalized) when repayment starts.
- Enter the repayment term. The federal standard plan is 10 years.
The results show the interest per day, the average interest per month, the interest built up before repayment, your monthly payment and the total interest.
How student loan interest is calculated
Federal and most private student loans charge simple daily interest:
daily interest = principal × annual rate ÷ 365
interest for a period = daily interest × number of days“Simple” means interest is charged on the principal only, not on earlier interest, unless that interest is capitalized. Once repayment starts, the loan is amortized like any other installment loan.
Worked example
You borrowed $30,000 at 5.5%, and repayment starts in 6 months, on a 10-year plan.
- Daily interest = 30,000 × 0.055 ÷ 365 = $4.52.
- Average monthly interest = 4.52 × 365 ÷ 12 ≈ $137.50.
- Interest built up over 6 months = $825.00.
- Not capitalized: the payment is $325.58 a month, and the total interest, including the $825, is $9,894.46.
- Capitalized: the balance becomes $30,825, the payment rises to $334.53, and total interest is $10,143.87, about $249 more.
Tips for keeping interest down
- Pay the interest during school or grace periods. Even paying the $137.50 a month in the example stops it from piling up.
- Make your first extra payments early. The balance is highest at the start, so that is when extra payments save the most.
- Know which loans are subsidized. Pay down unsubsidized and private loans first, since they accrue interest while subsidized loans don’t.
- Look at the full cost. Use the loan payoff calculator to see how extra payments shorten repayment, and the amortization calculator for the payment-by-payment breakdown.
Common mistakes
- Dividing the yearly rate by 12 for daily interest. Interest accrues daily, so use 365 days. A month’s interest varies slightly with the number of days.
- Assuming deferment is free. Interest usually keeps accruing on unsubsidized and private loans.
- Forgetting about capitalization. Check whether your lender adds unpaid interest to the balance, and when.
- Refinancing federal loans without thinking it through. A lower private rate can save interest, but you lose income-driven repayment and forgiveness options.
Frequently asked questions
How is student loan interest calculated?
Most student loans use simple daily interest. The daily charge is the principal × the annual rate ÷ 365. A $30,000 loan at 5.5% charges about $4.52 a day, or roughly $137.50 a month.
Does interest build up while I'm in school?
On unsubsidized federal loans and most private loans, yes. On subsidized federal loans, the government pays the interest while you're in school at least half-time and during grace periods.
What does capitalized interest mean?
Capitalization adds unpaid interest to your principal, so you then pay interest on that interest. Since July 2023, federal Direct Loans no longer capitalize interest in most situations, but private lenders often still do. Check your loan terms.
Can I deduct student loan interest on my taxes?
In the US, you may be able to deduct up to $2,500 a year of interest paid on qualified student loans, depending on your income. See our guide to the student loan interest deduction.
How can I reduce the interest I pay?
Pay the interest while you're still in school or in your grace period, so it never builds up. Make extra payments toward principal once repayment starts, and consider refinancing private loans if rates fall, keeping in mind that refinancing federal loans gives up federal protections.