How to Calculate an Unsubsidized Student Loan

When funding your college education, it is important to understand what the various types of student loans are and how they charge interest. In a subsidized student loan, the interest does not begin accruing until you stop attending school. However, in an unsubsidized student loan, the interest begins accruing the moment the loan is dispersed. This leads to a higher overall payment than an equivalent subsidized loan. Calculating your future payments before taking out an unsubsidized loan is a smart move.

Instructions

1

Find the amount of your loan. Currently, students can borrow up to $12,000 per year in unsubsidized loans, depending on the type of loan they are taking out, their status as dependent or independent students, and the number of years they have been in school.

2

Calculate how long the interest will accrue between the date of disbursement and the first date of repayment. The current interest rate for student loans is 6.8%. The interest will be capitalized, which means it will be added to the loan balance.

3

Decide what the repayment term will be. Remember that interest will continue to accrue for the life of the loan, and factor that into your calculations. Several student loan repayment calculators can assist you with this calculation if necessary.

4

Calculate the monthly payment amount. You can do this either by using on online calculator or by using this formula:

M = P * ( J / (1 - (1 + J) ^ -N))

Where:

M = monthly payment

P = principal

I = interest rate

J = monthly interest in decimal form (I/(12*100))

N = number of months over which the loan is amortized (L* 12)