Education Loan Calculator
Plan your college debt repayment strategy. This calculator accounts for post-graduation grace periods, interest capitalization, and standard 10- or 20-year amortisation schedules for federal and private student loans.
Disbursed student loan principal balance upon graduation
Direct unsubsidized federal or private student loan rate
Amortisation schedule duration
Post-graduation deferment before repayment commences (standard is 6 months)
Monthly installment due during active repayment
How to Use This Calculator
- Enter your cumulative student loan balance from federal and private originations.
- Enter the weighted average interest rate across your student loan portfolio.
- Select your target repayment schedule (Standard 10-year vs Extended 20-year plans).
- Set your post-graduation grace period duration (typically 6 months for Direct Federal loans).
- Review the monthly payment and total interest cost including capitalized deferment interest.
Formula & Calculation Methodology
Unsubsidized student loans accrue daily interest during school and the 6-month grace period; this unpaid interest capitalizes (adds into principal) at repayment entry.
Worked Example
$35,000 student loan at 5.5% with 6-month grace period on 10-year standard plan
Frequently Asked Questions
What is student loan interest capitalization?↓
Capitalization occurs when unpaid accrued interest is added to your original loan principal balance. Going forward, interest is charged on the new higher balance, increasing both your monthly payment and total borrowing cost.
How can I prevent student loan interest from capitalizing?↓
You can prevent capitalization by paying the accrued interest charges during school or during the 6-month grace period before active repayment begins.
What is the difference between Direct Subsidized and Unsubsidized loans?↓
On Direct Subsidized federal loans, the U.S. Department of Education pays the interest while you are in school and during grace periods. On Unsubsidized loans, interest accrues from the day of disbursement.
Can student loan interest be deducted on federal income taxes?↓
Yes. Up to $2,500 of student loan interest paid annually can be deducted as an above-the-line deduction on IRS Form 1040, subject to Modified Adjusted Gross Income (MAGI) phase-outs.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.