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How Do Lenders Calculate Student Loan Payments

Student loan payments are calculated based upon the terms of your loan. This will include your interest rate, the repayment term of your loan (i.e. the number of years you agreed to pay the loan back within) and the current outstanding balance on your loan.

If your loan was accumulating interest while you were in school, it’s entirely possible that the outstanding balance on your loan will be more when you enter repayment than when you first borrowed the money. The interest accrued during you schooling (if you were not making any payments during this time) will have been added to the outstanding principal amount of your loan, such that when you enter repayment the amount owed will be more than the amount you borrowed.

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