Student Loan Payment Interest-Only Estimator
This estimator computes interest-only payments and related figures for student loan balances. It supports common options: interest-only period length, payment frequency, optional capitalization of unpaid interest, and a subsequent amortization phase.
Use the tool to compare the immediate cashflow benefit of interest-only payments against the longer-term cost if interest capitalizes or when amortization follows. Results are illustrative and depend on the inputs you provide.
Flexible mode: choose whether interest capitalizes and calculate the amortizing payment on either the original principal or capitalized balance. This is the default mode.
Inputs
Results
Interest-only payment
$125.00
Total interest during interest-only period
$1,500.00
Principal after interest-only (may include capitalization)
$30,000.00
Post-interest amortizing payment (per period)
$318.20
| Output | Value | Unit |
|---|---|---|
| Interest-only payment | $125.00 | currency |
| Total interest during interest-only period | $1,500.00 | currency |
| Principal after interest-only (may include capitalization) | $30,000.00 | currency |
| Post-interest amortizing payment (per period) | $318.20 | currency |
Visualization
Methodology
Calculations use periodic-rate math: periodic_rate = annual_rate_pct / 100 / payments_per_year. Interest-only payment per period = principal × periodic_rate.
If interest capitalization is selected, accrued interest over the interest-only period is added to the principal before calculating amortizing payments. Amortizing payments use the standard fixed-payment formula for an installment loan with a constant periodic interest rate and fixed number of periods.
Worked examples
Example 1: $30,000 principal, 5% APR, 12-month interest-only period, monthly payments: periodic rate = 0.05/12 = 0.0041667. Interest-only payment ≈ $125.00 per month.
Example 2: Same loan but unpaid interest capitalizes at end of 12 months. Total interest ≈ $1,500; new principal ≈ $31,500; amortizing payments will be higher than if interest had been paid.
Further resources
Expert Q&A
Is this calculator exact for my loan?
This tool provides modeled results using standard financial formulas. Actual loan servicing rules (grace periods, rounding, accrual conventions, or special capitalization timing) may differ. Always verify with your loan servicer for exact amounts.
What does capitalization mean?
Capitalization means unpaid interest is added to the loan principal, after which future interest accrues on the higher balance, increasing total interest costs and later payments.
Can I use different compounding than monthly?
You can approximate different compounding by changing 'Payments per year'. The calculator treats the periodic rate as annual_rate_pct / payments_per_year; it does not model intra-period compounding beyond that periodic rate.
How should I interpret the post-interest payment?
The 'post-interest amortizing payment' is the fixed payment per period required to fully repay the specified balance over the chosen amortization_period_months at the same periodic rate. If amortization_period_months is small, payments will be larger.
How accurate and secure is this tool?
Calculations use standard formulas but may be affected by input rounding and assumptions. For sensitive decisions consult your loan servicer or a qualified financial advisor. See citations for standards on software assurance and handling of financial computations.
Sources & citations
- NIST - National Institute of Standards and Technology — https://www.nist.gov/
- ISO - International Organization for Standardization — https://www.iso.org/home.html
- IEEE Standards Association — https://standards.ieee.org/
- OSHA - Occupational Safety and Health Administration — https://www.osha.gov/