Student Loan Calculator
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Breakdown of principal and interest reduction for each period, starting after the grace period.
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Understanding Student Loan Repayment
Student loans behave like any other amortized loan once repayment begins, but they have one feature most consumer loans don't: a grace period. Understanding how interest behaves during that window — and how it can quietly grow your balance before you make a single payment — is the key to planning repayment realistically.
What Is a Grace Period?
Most federal student loans give borrowers a 6-month grace period after leaving school before payments must begin. It's designed to give you time to find a job, but interest doesn't necessarily wait with you.
Capitalization
If interest accrues during the grace period and isn't paid, it "capitalizes" — meaning it's added to your principal balance once repayment starts. From that point on, you pay interest on interest, which is why paying off accrued interest before capitalization can meaningfully lower your total cost.
Subsidized vs. Unsubsidized
On subsidized federal loans, the government covers interest during school and the grace period, so nothing capitalizes. On unsubsidized loans, interest accrues from day one — the grace period only delays payment, it doesn't stop the clock on interest.
Scope of This Calculator
This tool models a straightforward deferred-start amortization: grace period, capitalization, then a fixed monthly payment. It does not model income-driven repayment plans or loan forgiveness programs — those depend on rules that change independently of the math here.
Worked Example
Suppose you borrow $30,000 at a 5.5% annual rate, with a 6-month grace period and a 10-year (120-month) repayment term:
- Interest accrued during grace period: approximately $825.00.
- Capitalized principal at repayment start: approximately $30,825.00.
- Monthly payment: approximately $334.53.
- Total interest over repayment: approximately $9,318.98.
Grace Period Impact
- Original Loan: $30,000.00
- Capitalized Interest: $825.00
- Total Paid Over Term: $40,143.98
Why Paying During the Grace Period Helps
Even small voluntary payments during the grace period — enough to cover the accruing interest — prevent that interest from capitalizing. Since capitalized interest becomes part of the principal you pay interest on for the rest of the loan, eliminating it before repayment begins is one of the highest-leverage moves a new graduate can make.
A note on scope: Federal loan servicers may compound interest differently than the simple monthly accrual modeled here, and private lenders vary further still — treat this as a planning estimate and confirm exact terms with your loan servicer.
Key Takeaways
- Grace Period Interest Adds Up: Unsubsidized interest accrued before repayment begins gets capitalized into your principal, increasing every future payment.
- Pay Interest Early If You Can: Paying off accrued interest before capitalization avoids paying interest on interest for the life of the loan.
- Know Your Loan Type: Subsidized loans don't accrue interest during school or grace periods; unsubsidized loans do from disbursement onward.
- This Tool Doesn't Cover IDR/Forgiveness: Income-driven repayment and forgiveness programs follow separate government rules — consult your servicer for those calculations.