1. Comparing Subsidized vs. Unsubsidized Grace Periods
College GraduateBackground
A graduate has a $30,000 student loan at a 5.5% interest rate with a 6-month grace period and wants to see the cost difference between subsidized and unsubsidized options.
Problem
Determine how much extra interest capitalizes during the grace period for an unsubsidized loan compared to a subsidized one.
How to use
Input a loan amount of 30,000, an interest rate of 5.5%, a 10-year repayment term, and a 6-month grace period. Run the calculation once with 'subsidized' and once with 'unsubsidized'.
Loan Amount: 30000, Interest Rate: 5.5%, Repayment Term: 10 years, Grace Period: 6 months, Interest Type: unsubsidizedOutcome
The unsubsidized loan accrues $825 in interest during the grace period, which capitalizes to make the repayment principal $30,825, resulting in a higher monthly payment of approximately $334 compared to the subsidized loan's $326.