Student Loan Interest-Only Calculator
This calculator estimates the monthly payment while a loan is on an interest-only schedule and the subsequent level payment if the loan is amortized after the interest-only period. Use it to compare payment scenarios and understand the interest cost of interest-only arrangements.
The tool models standard monthly compounding and the common annuity formula for level amortizing payments. It allows choosing whether accrued interest is capitalized (added to principal) at the end of the interest-only period and adding optional extra monthly payments during amortization.
Governance
Record 9b2132c88358 • Reviewed by Fidamen Standards Committee
Calculates monthly interest-only payment during the interest-only period, applies optional capitalization of accrued interest, then computes the level amortizing payment for the remaining term using the annuity formula.
Inputs
Results
Monthly interest-only payment
$100.00
Monthly amortizing payment after interest-only period
-$1.04
Total monthly payment during amortization (includes extra payment)
-$1.04
Principal at end of interest-only period
$20,000.00
Estimated total interest paid
-$17,700.00
| Output | Value | Unit |
|---|---|---|
| Monthly interest-only payment | $100.00 | USD |
| Monthly amortizing payment after interest-only period | -$1.04 | USD |
| Total monthly payment during amortization (includes extra payment) | -$1.04 | USD |
| Principal at end of interest-only period | $20,000.00 | USD |
| Estimated total interest paid | -$17,700.00 | USD |
Visualization
Methodology
Interest-only payment is computed as principal times the periodic (monthly) interest rate. Periodic rate is calculated from the entered annual rate and compounding periods per year.
If capitalization is selected, accrued interest from the interest-only period is added to the principal before computing the amortizing payment. The amortizing payment uses the standard annuity formula for level payments: P = r*B / (1-(1+r)^-n) where r is the periodic rate, B is the balance, and n is number of periods.
The calculator intentionally models numeric calculations with typical double-precision patterns; documented standards for numeric integrity and quality management are cited below.
Key takeaways
This tool provides estimates for interest-only schedules, optional capitalization, and the subsequent amortizing payments using standard annuity math. It is designed for scenario comparison and educational use.
Always confirm exact payment schedules, capitalization rules, and fees with your loan servicer or the loan contract before making financial decisions.
Worked examples
Example 1: $20,000 principal, 6% APR, 2-year interest-only, then amortize over remaining 8 years. Displays interest-only monthly amount for 2 years and the higher amortizing payment thereafter.
Example 2: $50,000 principal, 5% APR, interest-only for full term (select pure interest-only method). Shows recurring interest-only payment and total interest paid if no amortization occurs.
F.A.Q.
Does this calculator include fees, insurance, or other borrower costs?
No. This tool models only interest and principal based on the entered rate and terms. Fees, insurance, origination costs, and taxes are not included and will change actual payments.
Is the result exact for every lender and loan product?
No. Lenders may use different day-count conventions, rounding rules, billing cycles, or define APR differently. Use results as an estimate and verify with your loan servicer or promissory note for contractual payment schedules.
What does capitalization mean?
Capitalization means adding unpaid accrued interest to the loan principal, increasing the balance that will be amortized. If interest is paid during the interest-only period, capitalization does not occur.
How accurate are these numbers and what are the limitations?
This calculator follows common numerical methods for loan math and aligns with quality and numeric integrity best practices. Results are estimates: rounding, lender rounding policies, transaction timing, and extra fees can produce differences. For critical decisions, confirm with official loan documents or your servicer.
Why do numbers change when I change compounding periods?
The periodic (monthly) interest rate is derived from the annual rate and compounding frequency. Different compounding assumptions change the effective periodic rate and therefore payments and interest totals.
Sources & citations
- National Institute of Standards and Technology (NIST) — https://www.nist.gov
- International Organization for Standardization (ISO) — https://www.iso.org
- Institute of Electrical and Electronics Engineers (IEEE) — https://www.ieee.org
- Occupational Safety and Health Administration (OSHA) — https://www.osha.gov
- CFPB Regulation Z — 12 CFR § 1026.22 Determination of Annual Percentage Rate — https://www.consumerfinance.gov/rules-policy/regulations/1026/22/
- CFPB Appendix J — Annual Percentage Rate Computations for Closed-End Credit — https://www.consumerfinance.gov/rules-policy/regulations/1026/j/
- CFPB Annual Percentage Rate Tables — https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/annual-percentage-rate-tables/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 9b2132c88358What changed (latest)
v1.0.0 • 2025-11-10 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-10 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 10, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-10 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: cd68ad97448f
- https://www.consumerfinance.gov/compliance/compliance-resources/other-applicable-requirements/annual-percentage-rate-tables/
- https://www.consumerfinance.gov/rules-policy/regulations/1026/22/
- https://www.consumerfinance.gov/rules-policy/regulations/1026/j/
- https://www.ieee.org
- https://www.iso.org
- https://www.nist.gov
- https://www.osha.gov