Student Loan Calculator

About Student Loan Calculator

Calculate student loan payments and total interest. This calculator provides instant results with step-by-step explanations to help you understand the calculation process.

Formula

How to use this calculator

1. Enter the loan amount, annual interest rate, and repayment term.
2. Choose the payment frequency if the tool supports it, such as monthly payments.
3. Check the monthly payment result to see what you would owe each period.
4. Review the total interest and total repaid so you can compare loan options.

The formula explained

For a standard fixed-rate loan, the calculator uses an amortization formula to find the regular payment. It then subtracts the original loan amount from the total of all payments to show the total interest paid.

• P = the original loan amount, also called the principal
• r = the periodic interest rate, usually the annual rate divided by the number of payment periods per year
• n = the total number of payments
• M = the regular payment amount

Step by step method

1. Find the periodic interest rate by converting the annual rate to a decimal and dividing by the number of payments per year.
2. Use the loan payment formula to compute the fixed payment amount.
3. Multiply the payment by the number of payments to get the total repaid, then subtract the principal to get the total interest.

Worked example

Problem. You borrow \(12000\) at an annual interest rate of \(6\%\) for \(5\) years with monthly payments. What is the monthly payment and total interest?

1. Convert the annual rate to a monthly rate, so \(r = \frac{0.06}{12} = 0.005\). The number of payments is \(n = 5 \times 12 = 60\).
2. Use the loan payment formula \(M = P \cdot \frac{r(1+r)^n}{(1+r)^n - 1}\). Substituting values gives \(M = 12000 \cdot \frac{0.005(1.005)^{60}}{(1.005)^{60} - 1}\).
3. This gives a monthly payment of about \(232.12\). The total repaid is \(232.12 \times 60 = 13927.20\), so the total interest is \(13927.20 - 12000 = 1927.20\).

Tips and common mistakes

• Make sure the interest rate is entered as an annual percentage, not a monthly percentage, unless the calculator asks for monthly input.
• A longer repayment term lowers the monthly payment, but it usually increases the total interest paid.

Frequently asked questions