The accrued interest calculator allows you to see how much college loan debt is added to your original amount with deferred student loans.
Most students do not realize that they are increasing their debt load with accrued interest- they're just thankful that they do not have to pay until they are out of school.
But this interest, unless you pay it before you are out of your grace period, will in turn accrue more interest over the life of your loan.
For the entire time your loan is in repayment, you will be paying interest on interest.
Almost every type of college loan can be deferred until after graduation, but lenders will also allow you (without penalty) to pay the accruing interest on these loans, while the principal is deferred.
The only college loan that does not accrue interest while you are in school is a subsidized Stafford loan.
You do not have to wait until after graduation to find out what the added amount on your loans will be. The accrued interest calculator can help you figure out the amount you can pay your lender before this is added onto your debt, for:
Choose how often the interest compounds. (Check your master promissory note.)
Click "Go".
For example, if you put in the maximum federal unsubsidized loan for freshman-
$5500
defer it for 51 months (12 months for the 1st year; 12 months for the 2nd year; 12 months for the 3rd year; 9 months for the 4th year (graduation in May); and 6 months grace period)
at 6.8% and
compound it quarterly
-you get added interest of $1825.19 and a total balance due at repayment of $7325.19 on that original $5500 loan.
Do the amounts for each year's loan on the calculator (remember that the limits change) and then add them together.
And then realize that repayment of interest while in school, is always an option on any loan (Check the loan interest payment calculator!)and that it does not negate your deferment.
The accrued interest calculator shows the damage that deferring payment on college loans for students, can do.
If you are wondering, how on earth you would be able to pay the interest on these loans while you are in school, check out the new, refundable college tax credit that can be used by student loan borrowers.
