Student Loan Calculator
A student loan calculator estimates your monthly repayment and reveals a cost that catches many graduates off guard: interest that builds up during the grace or deferment period and is then added to the balance. Once that interest "capitalizes," you pay interest on it for the rest of the loan. Enter your balance, rate, repayment term, and grace period to see your payment and the lifetime cost of that capitalization.
- Principal
- Interest
- Interest capitalized in grace
- $750.00
- Starting balance after grace
- $25,750.00
- Total interest
- $9,305.34
- Total repaid
- $34,305.34
- Term
- 10 yr
During the 6-month grace period, 750 of interest accrues and capitalizes onto your balance, raising it to 25750 before repayment even begins. Because you then pay interest on that larger balance, the grace period adds to everything you repay.
Amortization schedule
| Year | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $3,430.53 | $1,492.27 | $1,938.26 | $23,811.74 |
| 2 | $3,430.53 | $1,372.73 | $2,057.81 | $21,753.93 |
| 3 | $3,430.53 | $1,245.81 | $2,184.73 | $19,569.20 |
| 4 | $3,430.53 | $1,111.06 | $2,319.48 | $17,249.73 |
| 5 | $3,430.53 | $968.00 | $2,462.54 | $14,787.19 |
| 6 | $3,430.53 | $816.11 | $2,614.42 | $12,172.77 |
| 7 | $3,430.53 | $654.86 | $2,775.67 | $9,397.09 |
| 8 | $3,430.53 | $483.66 | $2,946.87 | $6,450.22 |
| 9 | $3,430.53 | $301.91 | $3,128.63 | $3,321.59 |
| 10 | $3,430.53 | $108.94 | $3,321.59 | $0.00 |
Ways to optimize
Real what-if scenarios calculated from your numbers.
Scenarios use the exact same math as the calculator — no estimates.
How it works
Most student loans give you a grace period — often around six months after leaving school — before repayment starts. On unsubsidized loans, interest still accrues during that time. When repayment begins, the lender capitalizes that accrued interest: it is added to your principal, and from then on you pay interest on the larger combined balance.
This calculator first computes the grace-period interest using simple monthly accrual on your starting balance, then folds it into the balance. Your monthly payment is a standard reducing-balance installment on that capitalized balance over your repayment term. The total interest shown adds both the grace-period accrual and the interest paid during repayment, so you see the full lifetime cost — not just the repayment portion that most calculators report.
Accrued grace interest = balance × (annual rate ÷ 12 ÷ 100) × grace months. Capitalized balance = balance + accrued. Monthly payment = capitalized balance · i · (1 + i)^n / ((1 + i)^n − 1), with i = annual rate ÷ 12 ÷ 100 and n = years × 12.
Worked example
Take a 25,000 balance at 6% with a 10-year (120-month) repayment term and a 6-month grace period. Monthly interest accrues at 6% ÷ 12 = 0.5%, so grace interest is 25,000 × 0.5% × 6 = 750. That capitalizes, raising the balance to 25,750. At 6% over 120 months the payment is about 286. Across repayment you pay roughly 8,560 in interest; adding the 750 from the grace period gives about 9,310 in total interest — and your true starting balance was 25,750, not 25,000.
Things to watch out for
Subsidized loans differ: the government pays the interest during an in-school or grace period, so nothing capitalizes — set the grace period to 0 to model that. Making interest-only payments during the grace period also prevents capitalization and is one of the cheapest ways to save on a student loan. Income-driven repayment plans can stretch the term and lower payments but increase total interest, and unpaid interest under some plans can capitalize later. A 0% rate means no accrual at all, so the grace period costs nothing.
Frequently asked questions
What does it mean for interest to capitalize?+
Capitalization adds unpaid interest to your loan principal. After it happens, you pay interest on a larger balance — interest on interest — which raises the total you repay.
Does interest build up during the grace period?+
On unsubsidized loans, yes. Interest accrues throughout the grace or deferment period and is typically capitalized when repayment begins. On subsidized loans the lender usually covers it, so nothing is added.
How can I avoid capitalized interest?+
Make interest-only payments during the grace or deferment period so the accrued interest is paid off before it can be added to your principal. Even partial payments reduce how much capitalizes.
Why is my starting balance higher than what I borrowed?+
Because grace-period interest is capitalized onto the loan before repayment starts. This calculator shows that larger "starting balance after grace" so you know what your payments are actually based on.
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Disclaimer: This calculator is for educational and informational purposes only and provides estimates, not financial advice. Interest rates, taxes, fees, and local rules vary and change over time. Confirm figures with a qualified professional before making any financial decision.
Last reviewed: 2026-06-22