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Student Loan Capitalized Interest Calculator
Find out how much interest piles up on your student loan while you are in school, in your grace period, or in deferment or forbearance, what your balance becomes when that interest is capitalized, and how much paying the interest early would save over the life of the loan.
Last updated:
The loan
Loan type
$
Total disbursed (treated as one disbursement)
%
Time before repayment
months
From disbursement until you leave school
months
Federal loans: 6 months
months
e.g. grad school, unemployment
months
Interest accrues on every loan type
$
0 = pay nothing until repayment starts
Repayment
Enter your values to see the result.
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How to use the Student Loan Capitalized Interest Calculator
Pick the loan type: subsidized loans don't accrue interest in school, grace or deferment.
Enter the amount borrowed and the interest rate.
Enter months in school, grace, deferment and forbearance before repayment begins.
Add any interest you pay each month before repayment, and choose whether unpaid interest is capitalized.
Press Calculate capitalized interest to see the new balance, payment and the cost of waiting.
Capitalized interest formula
Monthly interest = principal × annual rate ÷ 12 (simple interest, not compounded)
Accrued interest = monthly interest × months that accrue − interest you paid
Capitalized balance = principal + unpaid accrued interest
Monthly payment = B × i ÷ (1 − (1 + i)−n), where B is the balance, i = rate ÷ 12 and n = months in the term
Example: $27,000 unsubsidized at 6.39% for 45 months of school and a 6-month grace period accrues $7,332.52. Capitalized, the balance becomes $34,332.52 and a 10-year payment is $387.92 instead of $305.07, costing about $2,600 more over the life of the loan than paying the interest as it accrued.
Interest accrued on every $10,000 borrowed
Time before repayment
5.00%
6.39%
7.94%
9.00%
12 months
$500.00
$639.00
$794.00
$900.00
24 months
$1,000.00
$1,278.00
$1,588.00
$1,800.00
36 months
$1,500.00
$1,917.00
$2,382.00
$2,700.00
51 months (4 years + grace)
$2,125.00
$2,715.75
$3,374.50
$3,825.00
63 months (5 years + grace)
$2,625.00
$3,354.75
$4,168.50
$4,725.00
6.39% and 7.94% were the 2025-26 federal rates for undergraduate and graduate unsubsidized loans. Real loans are usually disbursed each semester, so later disbursements accrue for less time; treat these figures as an upper estimate.
Ways to limit capitalized interest
Pay the interest while in school, even small amounts, to keep the balance from growing.
Pay off accrued interest before a capitalization event, such as the end of a deferment.
Prefer deferment over forbearance for subsidized loans, since the government covers interest in deferment.
Use subsidized loans first if you qualify; they accrue nothing while you study.
Borrow only what you need each semester; every dollar starts accruing on its disbursement date.
Frequently asked questions
What is capitalized interest on a student loan?
Capitalization means unpaid interest is added to the principal balance. From then on, interest is charged on the larger balance, so you pay interest on interest. It typically happens when a deferment ends, and private lenders often capitalize when repayment begins.
How do I calculate interest accrued while in school?
Federal student loans use simple interest: balance × annual rate ÷ 12 per month (or ÷ 365 per day). $27,000 at 6.39% accrues $143.78 a month, so 45 months in school plus a 6-month grace period adds about $7,332.52 of interest.
Do subsidized loans accrue interest in school?
No. The government pays the interest on Direct Subsidized Loans while you are enrolled at least half time, during the six-month grace period and during deferment. Interest does accrue during forbearance and repayment.
Does federal student loan interest still capitalize?
Less often. Since July 1, 2023, the Department of Education no longer capitalizes interest when you first enter repayment or leave forbearance on Direct Loans. Capitalization can still occur in some cases, such as at the end of a deferment on unsubsidized loans. Unpaid interest is still owed either way.
Should I pay the interest while I'm in school?
If you can, it saves money: paying $143.78 a month on a $27,000 loan at 6.39% keeps the balance at $27,000 and lowers the 10-year payment from about $387.92 to $305.07. The comparison table shows your exact savings; even partial payments help.
Does capitalized interest raise my monthly payment?
Yes. Your payment is calculated on the balance when repayment starts, so adding unpaid interest raises both the monthly payment and the total interest over the life of the loan.
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