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Daily Interest Formula:
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Student loan interest typically accrues daily based on your outstanding balance. This calculator helps you understand how much interest accumulates over a specific period before it capitalizes (gets added to your principal balance).
The calculator uses the daily interest formula:
Where:
Explanation: The formula first converts your annual rate to a daily rate by dividing by 365, then multiplies by your balance and the number of days.
Details: Even small daily interest amounts can add up significantly over time, especially during periods of deferment or forbearance when payments aren't being made but interest continues to accrue.
Tips: Enter your current loan balance in dollars, your annual interest rate as a decimal (e.g., 0.05 for 5%), and the number of days you want to calculate interest for. All values must be positive numbers.
Q1: Why divide by 365 instead of 360?
A: Most federal student loans use actual/365 day count convention, though some private loans may use 360. Check your loan terms.
Q2: Does interest compound daily?
A: Interest typically accrues daily but only compounds when it capitalizes (gets added to principal), which happens at specific events like the end of grace periods.
Q3: How can I reduce my interest accrual?
A: Making payments while in school or during grace periods can significantly reduce total interest over the life of the loan.
Q4: What's the difference between simple and compound interest?
A: This calculator shows simple daily interest. Compound interest would be calculated on both principal and previously accrued interest.
Q5: How accurate is this calculator?
A: It provides a close estimate, but your actual interest may vary slightly based on your lender's specific calculation methods.