Student Loan Capitalized Interest Calculator

Hamza Gujjar Reviewed by Hamza Gujjar, Algorithm Architect & Software Developer Last updated: July 28, 2026
Disclaimer: This calculator is provided for informational and educational purposes only and does not constitute financial, medical, legal, or other professional advice. Always consult a qualified professional before making decisions based on these results.

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Student Loan Capitalized Interest Calculator

Coming out of deferment or forbearance? This calculator shows exactly how much unpaid interest will be added to your principal.

Accrued Interest = Principal x (Annual Rate/12) x Months
New Capitalized Balance = Principal + Accrued Interest

Example

$30,000 principal, 6% annual rate, 12 months of deferment:

Accrued Interest = $1,800.00 → $31,800.00 new balance

What Capitalization Actually Does

Capitalization means unpaid accrued interest gets added directly to the loan's principal balance - after this happens, future interest is calculated on the new, larger balance, meaning the capitalized interest itself begins accruing additional interest going forward.

Paying Interest During Deferment Avoids This

Making even small interest-only payments during a deferment or forbearance period, rather than letting interest fully accrue and capitalize, can meaningfully reduce total loan cost over time by preventing this "interest on interest" compounding effect.