Interest that accrues while in school

[matty675]

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Interest accrues while you are in school, right? It seems like whenever people talk about the cost of attendance for a particular school, they don't add in the interest that accrues over the course of the 4 years that you are in school and not making any loan payments.

I calculated that a school costing $55,000/ yr- $220,000 total would accrue around $100,000 of interest at a rate of 6.8% . That brings the grand total of your loan when you get out of school to $320,000- which seems like A LOT of interest. Are my calculations right?

 

[Faux]

Unless my online excel spreadsheet is being weird, it would just be $259,918.69 when you graduate. I imagined it being higher too, so hopefully someone else can confirm.

The end sum amount would obviously vary with the length term.

And the schools don't mention it either 😛

 

[jmh018]

I don't think your numbers are right.

$55,000 x .068 = 3,740.

The next year you will have 110,000 in debt x .068 = $7,480.

Third year: $165,000 x .068 = $11,220

Fourth year: $220,000 x .068 = $14,969

All the interest added together is $37,400 unless I'm mistaken. The number would be a little higher because I think the interest is added to the principle and the interest is decided from that but I'm not sure about that so it would be around $40,000 in interest which is what Faux came up with from the spreadsheet.

 

[matty675]

After a little more digging, I think it would depend on whether or not the interest is compounded/ when it is compounded. Or perhaps, when it is capitalized

Does anyone know if student loans are compound interest?

 

[distressstudent]

After a little more digging, I think it would depend on whether or not the interest is compounded/ when it is compounded. Or perhaps, when it is capitalized

Does anyone know if student loans are compound interest?

Interest accrues, but they aren't capitalized until you start your repayment period.

 

[matty675]

So does it capitalize after school or what?

 

[distressstudent]

So does it capitalize after school or what?

your grace period is 6 months after school. it capitalizes the moment you choose to enter your repayment period.

 

[Faux]

After a little more digging, I think it would depend on whether or not the interest is compounded/ when it is compounded. Or perhaps, when it is capitalized

Does anyone know if student loans are compound interest?

https://pbs.twimg.com/media/B-P8SeWIEAAHjwI.jpg:large

some love. If you need something more clear, yet me know.

The subsidized loans were the ones where the internet was paid while you were in school. But as you know, thats no longer available for grad students.

 

[matty675]

Oh okay, I see, so only after school is the interest added to the principal.

 

[matty675]

WOW! Props