How to calculate daily student loan interest.

Do you know how much you’re paying in student loan interest? The first time I calculated my student loan interest, I was furious. At that time, I had just graduated graduate school and I was looking for my first “big girl” job. I was $63,000 in debt and I had no idea how I was going to afford to pay $10 in interest a day. With or without a job, I found $10 a day unfair! And quite frankly, I felt blindsided by the entire debt repayment process. Half of my monthly payment would go towards student loan interest and it would take ten years to pay off my entire balance. This scared me into paying my student loans faster.

The Impact of Student Loan Interest

Student loan interest is important to any repayment plan because it’s the additional cost you pay on top of the principal (the total amount of money you borrowed). It’s the cost of doing business with your lender.

Interest is a percentage of your principal and since it’s charged daily, the longer you take to pay off your balance, the more interest accumulates.

Interest rates will vary depending on the type of loan you have, so it’s important to note all the different interest rates in your portfolio.

How To Use Your Daily Interest Rate

My daily interest rate is one of the metrics I use to keep track of my repayment progress. In less than three years, I’ve reduced my daily interest rate from $10 to $2.94.

How to Calculate Daily Student Loan Interest Rate

Here’s how to calculate daily interest on a student loan.

Step 1: Write down all of your principal and interest rates.

Principal  Interest 
Loan #1 $5,000 4.5%
Loan #2 $7,000 6.55%

Step 2: Do the math.

1. Formula: Principal x Interest = Total Interest Dollar Amount 

Loan #1: $5,000  x 0.045 = $225

Loan #2: $7,000 x 0.0655 = $458.50

** This formula calculates the total interest charged per year. So for Loan #1, you can expect to pay $225 in interest a year.

2. Formula: Total Interest Dollar Amount / 365 = Daily Student Loan Interest Amount 

Loan #1: $225 / 365 days = $0.61 cents per day

Loan #2: $458.50 / 365 days = $1.25 cents per day

This formula calculates the daily interest charged on a loan. We divide by 365 because there are 365 days in a year.

Step 3: Add the daily interest amounts

Formula: Loan #1 Daily Student Loan Interest Amount + Loan #2 Daily Student Loan Interest Amount = Total Daily Student Loan Interest Amount

$0.61 + $1.25 = $1.86 Total Interest Per Day

There you have it, this is how you calculate the daily interest on all of your loans. In this example, you can expect to pay $1.86 in interest per day.

**Bonus Step 4: Figure out how much interest you will pay per payment

1) If you are making weekly payments: Total Interest Per Day x 7 days

$1.86 x 7 days = $13.02 to pay per week

2) If you are making bi-weekly payments: Total Interest Per Day x 14 days

$1.86 x 14 days = $26.04 to pay every two weeks

3) If you are making monthly payments: Total Interest Per Day x 30 days

$1.86 x 30 days = $55.80 to pay per month

Final Thoughts

How does your daily student loan interest make you feel? Do you feel comfortable with it? Are you feeling angry or frustrated?

If you’re feeling any type of emotion and want to do something about it, use these steps to know where you stand and continue to keep track of your progress. If need be, identify what you need to cut out of your life and reallocate that money towards your debt. And don’t forget, the road to repayment is long, but it’s doable.

10 replies
  1. Whitney says:

    Great post on student loan debt. My husband has student loan debt coming up soon, so this is very informative for everyone. Great blog posts!

  2. Lydia says:

    This was interesting to read! I’m not student, but know so many who have just graduated and are just now figuring their loans ?

  3. Tiffany M. Zwieg says:

    Great post! I am proud to say I paid mine off this last summer! Woo-hoo!!! Now, I do education by cash only, no more loans!

  4. Kacy Stephenson says:

    Unfortunately this is information that everyone I know could benefit from. This made an otherwise mysterious process super easy to understand. Thanks for sharing!

  5. Kimberly Fouche says:

    I’m not sure if I even want to know how much I’m paying on mine. After finding out how much I am paying on my car, which is far too much, I’m scared to know how much my school loans are racking up.

  6. MegOhKay says:

    I can not wait to get a good hold on my student loans. That’s what happens when you get your Masters I suppose. Your math breaks it down nicely, thank you!


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