Student loan calculator
Interest accrues while you study and through the grace period. When it capitalises it joins the principal, and from then on you pay interest on your interest.
Student loan calculator
Payment schedule
Capitalisation is the quiet cost
Unsubsidised student loans accrue interest from the day they are disbursed — while you study, through the grace period, and during any deferment or forbearance. That interest sits separately until a trigger event, at which point it is capitalised: added to the principal.
From then on you pay interest on that interest. On $35,000 at 6.5% across four years of study and grace, roughly $9,100 accrues. Capitalised, you begin repayment owing $44,100 rather than $35,000, and every future interest charge is calculated on the larger figure.
The cheapest thing you can do
Pay the accruing interest while you are still studying. On the figures above that is about $190 a month — and it prevents capitalisation completely. It is the highest-return small action available to most borrowers, and almost nobody is told about it.
Subsidised and unsubsidised
On subsidised federal loans the government pays the interest while you are enrolled at least half-time and during the grace period. Nothing accrues, nothing capitalises. On unsubsidised loans, Grad PLUS and Parent PLUS, it all accrues from disbursement. Set the subsidised share above to see the difference; it is usually thousands.
Before you change plans
The standard 10-year plan carries the highest payment and the lowest total cost. Extended and income-driven plans reduce the payment by lengthening the term, which raises total interest — sometimes close to doubling it. Income-driven plans exist for real hardship and for forgiveness programmes, not as a default. Our repayment guide compares them properly.
Guides that explain this
Written with the same engine, so every figure agrees with the calculator.
APR vs interest rate: what actually separates themWhat separates APR from the interest rate, which fees are included, and why APR quietly flatters a loan you will not keep for its full term.8 min read
Student loan repayment without guessingRepayment plans compared on total cost, when refinancing federal loans is a mistake, and how capitalisation quietly inflates your balance.10 min read
How your credit score sets your interest rateWhat a credit score is built from, how score bands translate into real rate differences and dollars, and which actions move a score quickly versus slowly.10 min read
Questions people actually ask
What is student loan capitalisation?
Unpaid accrued interest being added to your principal at a trigger event, after which you pay interest on that interest. On $35,000 at 6.5% over four years of study and grace, roughly $9,100 capitalises.
Should I pay interest while still in school?
If you can, yes. Paying only the accruing interest — about $190 a month on a $35,000 unsubsidised balance at 6.5% — prevents capitalisation entirely and is the single highest-return action available to most borrowers.
What is the difference between subsidised and unsubsidised loans?
On subsidised loans the government pays the interest while you are enrolled at least half-time and during the grace period, so nothing accrues. On unsubsidised, Grad PLUS and Parent PLUS loans, interest accrues from disbursement.
Which repayment plan costs the least?
The standard 10-year plan. It has the highest monthly payment and the lowest total interest. Extended and income-driven plans lower the payment by stretching the term, which raises the total.