FAFSA Interest Calculation

resiliens

2+ Year Member
I'm trying to calculate the interest I'll accrue on loans I'm taking out and came across FAFSA's simple daily interest formula: Interest = Outstanding principal balance * Number of days since last payment * (Interest rate/Number of days in the year). The formula can be found at https://studentaid.ed.gov/sa/types/loans/interest-rates#how-calculated.

Regarding the "number of days since last payment", would making a payment of \$0.01 every day keep the variable at 1 or 0 days, and hence significantly lower the interest I'll be paying? This appears too good to be true and I think I'm misunderstanding how interest will accrue on my loans.

Could some of you more mathematically inclined folks please explain where I've gone wrong? Thanks.

Edit: I think the formula is incorrect and shouldn't include the "number of days since last payment" variable.

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2+ Year Member
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CaesarRO

2+ Year Member
I'm trying to calculate the interest I'll accrue on loans I'm taking out and came across FAFSA's simple daily interest formula: Interest = Outstanding principal balance * Number of days since last payment * (Interest rate/Number of days in the year). The formula can be found at https://studentaid.ed.gov/sa/types/loans/interest-rates#how-calculated.

Regarding the "number of days since last payment", would making a payment of \$0.01 every day keep the variable at 1 or 0 days, and hence significantly lower the interest I'll be paying? This appears too good to be true and I think I'm misunderstanding how interest will accrue on my loans.

Could some of you more mathematically inclined folks please explain where I've gone wrong? Thanks.

Edit: I think the formula is incorrect and shouldn't include the "number of days since last payment" variable.
Could they mean number of days since payment from *their* end? As in they paid out to you \$x on December 31. So number of days since December 31?

I think they make all these rules intentionally convoluted and ambiguous.

*hmph*