Student Loan Calculator — With In-School Interest & Capitalization
Calculate your post-graduation monthly payment and lifetime loan cost. Toggle between subsidized and unsubsidized loans to see the exact impact of interest capitalization while in school.
Student Loan Calculator
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The Formula
The monthly payment uses standard amortization on the effective principal after capitalization. For unsubsidized loans, interest compounds monthly during school and the grace period, then is added (capitalized) to the principal before repayment begins — permanently increasing the balance you will pay interest on for years.
Variable Definitions
Subsidized Loans
The federal government pays the interest that accrues on Direct Subsidized Loans while you are enrolled at least half-time, during the 6-month grace period after graduation, and during periods of deferment. Your principal stays flat throughout school — you start repayment owing exactly what you borrowed, with no capitalized interest.
Unsubsidized Loans
Interest begins accruing from the day the loan is disbursed — through school, grace period, and any deferment period. You can choose to pay this interest as it accrues or allow it to be capitalized at repayment start. A $35,000 loan at 6.53% accrues approximately $1,905 per year in interest while you are in school.
Interest Capitalization
The moment your grace period ends, all unpaid accrued interest is added to your principal balance. You then pay interest on this larger number for the entire repayment term. A $35,000 loan with $3,810 in capitalized interest means you start repayment owing $38,810 — permanently increasing every future payment calculation.
Income-Driven Repayment
Federal IDR plans (SAVE, IBR, PAYE, ICR) cap monthly payments at 5-20% of discretionary income. After 20-25 years of qualifying payments, remaining balances may be forgiven, though the forgiven amount is typically taxable as income. The 20 and 25-year term options in this calculator reflect these plan timelines.
Post-Graduation Grace Period
Federal student loans provide a 6-month grace period after graduation (or dropping below half-time enrollment) before payments begin. During this period, subsidized loans continue to have interest paid by the government; unsubsidized loans continue accruing interest that will capitalize at repayment start.
How to Use This Calculator
- 1
Enter your total loan balance and interest rate, then select your repayment term. The Standard 10-year plan gives the lowest total interest; IDR plans have lower payments but higher lifetime cost.
- 2
If you are currently in school, select "Yes" and enter your remaining months to see the impact of interest accrual and capitalization before repayment begins.
- 3
Choose Subsidized or Unsubsidized — the difference in lifetime cost can be thousands of dollars due to interest capitalization.
Common Applications
- Compare the total lifetime cost of subsidized versus unsubsidized student loans including interest that accrues during school and grace periods.
- Calculate the monthly payment and total repayment amount for federal student loans under different term lengths and interest rates.
- See how paying interest while still in school prevents capitalization and saves thousands of dollars over the life of the loan.
Unsubsidized student loans accrue interest from day one — capitalization at graduation permanently increases your principal and lifetime cost
Understanding the Concept
The difference between a subsidized and unsubsidized loan with the same balance and interest rate can be thousands of dollars over the life of the loan. For a $35,000 loan at 6.53% with 3 years of school and a 6-month grace period (42 months total deferment), an unsubsidized loan accumulates approximately $7,985 in capitalized interest before the first payment is due. Your starting balance at repayment is effectively $42,985 instead of $35,000 — and every monthly payment and lifetime interest cost is calculated on that higher number. Paying even small amounts of interest while in school can prevent this capitalization and save thousands.
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