About the Student Loan Calculator
A student loan is the only ordinary loan where the balance grows before you make a single payment.
You borrow the money in your first year. Interest starts charging that day. You do not pay any of it while you study, or during the grace period after you finish — so it accumulates quietly in the background. Then, at the moment repayment begins, all of it is added to the principal in one go.
That event is called capitalisation, and it is why graduates so often find they owe noticeably more than they borrowed on the day the first bill arrives. On £30,000 at 6.5% with four years of study and six months of grace, the balance you start repaying is £38,775.
This calculator shows you that number, what it costs, and what you could have done about it.
How to Use the Student Loan Calculator
Enter the total amount borrowed across all years, and the interest rate.
Say whether the interest is subsidised during study. This is the single most consequential field on the page, and the answer is usually on your loan paperwork rather than anywhere obvious.
Then your years of study remaining and the grace period after you finish. Together these make up the deferment, and interest accrues across all of it on an unsubsidised loan.
Finally the repayment term. Ten years is the standard plan.
How Interest Behaves Before You Pay Anything
During deferment, interest accrues simply — it builds up but is not added to the principal:
accrued = principal × rate × years
30,000 × 6.5% × 4.5 = 8,775This matters, and it is not a simplification. Interest during deferment genuinely does not compound, which is exactly why capitalisation is a single visible event rather than a gradual creep. Modelling it as compounding would overstate the balance.
Then, on the day repayment begins:
new principal = 30,000 + 8,775 = 38,775From here the accrued interest is principal. It earns interest of its own, for the whole repayment term.
The Cost of Capitalisation
Once the balance is set, the payment is the ordinary annuity formula:
r
P = A × ─────────
1 − (1+r)⁻ⁿOn £38,775 at 6.5% over 120 months, that is £440.28 a month.
Had nothing capitalised, the same loan from £30,000 would be £340.64 a month. The difference over ten years:
| Balance at repayment | Monthly | Total repaid | |
|---|---|---|---|
| Nothing accrued | 30,000 | 340.64 | 40,877.41 |
| Unsubsidised | 38,775 | 440.28 | 52,833.89 |
£11,956.48. And it splits into two parts worth separating:
- £8,775 is the accrued interest itself — money genuinely owed for the use of
the loan during study.
- £3,181.48 is interest charged on that interest, purely because it was
capitalised rather than paid.
The second figure is the avoidable one.
What the Subsidised Label Is Worth
Two students borrow £30,000 at 6.5%. Same rate, same term, same everything except one word on the paperwork.
The subsidised borrower repays £40,877.41. The unsubsidised borrower repays £52,833.89.
That is the entire difference the subsidy makes, and it is larger than most people expect from something that sounds like an administrative detail. If you have a mix of subsidised and unsubsidised loans and any choice about which to draw down first, this is the number that should drive it.
Paying Interest While You Study
This is the unusual case where a small payment returns more than it costs.
Paying just the interest during deferment is £162.50 a month on these figures — 30,000 × 6.5% ÷ 12. Over four and a half years that is £8,775.
It removes the entire capitalisation, saving £11,956.48.
You put in £8,775 and get back £11,956 — because you avoid not only the accrual but every pound of interest that would have been charged on it for the following ten years. There are not many places in personal finance where the arithmetic is that one-sided.
Step-by-Step Example
£30,000 at 6.5%, four years of study, six months of grace, ten-year term, unsubsidised.
Deferment: 4 × 12 + 6 = 54 months
Accrued: 30,000 × 6.5% × (54 ÷ 12) = 8,775.00
Capitalised: 30,000 + 8,775 = 38,775.00
Monthly rate: 6.5% ÷ 12 = 0.5417%
Payment: 38,775 × 0.005417 ÷ (1 − 1.005417⁻¹²⁰) = 440.28
Total repaid: 120 × 440.28 = 52,833.89
Interest: 8,775 + 14,058.89 = 22,833.89So £30,000 borrowed costs £22,833.89 in interest — 76% of the amount borrowed.
The first payment, split:
Interest: 38,775 × 0.5417% = 210.03
Principal: 440.28 − 210.03 = 230.25Just under half of it is interest. Note that it is charged on £38,775, not the £30,000 you actually received.
Understanding Your Result
The monthly payment is the standard-plan figure, calculated on the balance after capitalisation.
Balance at repayment is the number that surprises people — what you owe on day one of repayment, and how much of it was never borrowed.
Total interest includes both what accrued during study and what accrues during repayment, stated as a share of what you originally borrowed.
Total repaid is everything.
Worth knowing carries the capitalisation cost, the payment it would have been without it, and what paying interest during study would have taken.
When Should You Use This Calculator?
Before taking on more debt. Seeing what a further year's borrowing becomes after capitalisation is a very different figure from the amount itself.
Choosing between subsidised and unsubsidised loans. If you have any control over the mix, the gap above is the argument.
Deciding whether to pay interest while studying. Usually the best-value optional payment available to a student, and this puts a number on it.
Choosing a repayment term. Stretching from ten years to twenty drops the payment from £440.28 to £289.10 and raises the total from £52,833.89 to £69,382.15.
Understanding a balance that looks wrong. If you owe more than you borrowed and have never missed a payment, capitalisation is almost certainly why.
Common Mistakes
Assuming the balance stays put while you study. On an unsubsidised loan it grows from the day of disbursement.
Treating "subsidised" as a minor label. It is worth nearly £12,000 on a £30,000 loan over these timescales.
Forgetting the grace period. It feels like a break from the loan. Interest does not agree — six months adds £975 here.
Choosing the longest term available by default. The lower payment is real and so is the cost. Pick the shortest term you can genuinely afford, and remember you can usually overpay a shorter one.
Ignoring small payments during study. Even partial interest payments reduce what capitalises, and the saving is disproportionate.
Comparing student loan rates to mortgage rates. The rate is only part of it; the deferment structure has no mortgage equivalent and changes the comparison substantially.
Reading this as your official figure. Loan servicers apply their own conventions for daily accrual, payment dates and plan rules, and government programmes may change repayment entirely. Every figure here is an estimate for planning.