Why education loans grow while you study
Many education loans don't need repaying while you're studying, and sometimes for a period after. Interest is often still charged during that time and added to the balance, so you start repaying more than you borrowed.
When interest is added to the balance, the next interest charge is worked out on the bigger amount, so interest builds on interest. This calculator shows that growth, assuming nothing is repaid during the time period.
Once repayments start, your payments cover the interest and reduce the balance. Use the education loan repayment calculator or study loan interest calculator to see the cost of repaying.
Worked example
Borrowing £20,000 at 8% a year, compounded monthly, with nothing repaid during a 4-year course, you'd owe £27,513.32 when repayments start. That's £7,513.32 of interest, and a balance 1.38 times the amount borrowed.
If you borrow in instalments each year rather than all at the start, less interest builds up, because later instalments are borrowed for a shorter time. This calculator treats the whole amount as borrowed at the start.
Check your loan's terms
Education loans vary widely. Some have interest-free periods, some have rates linked to inflation, and some set repayments by income rather than as a fixed instalment. Check your loan agreement for how interest is charged while you study.
Inputs for the education loan compound interest calculator
Amount borrowed
The amount you borrow for your studies, treated as borrowed at the start of the period.
Annual interest rate
The yearly interest rate on the loan. The rate shown is only an example, so enter the rate from your loan agreement.
Time period
How many whole years until you start repaying, such as the length of your course.
Interest compounds
How often interest is added to the balance: daily, monthly, quarterly or annually. Check your loan agreement if you're not sure.
CALCULATOR QUESTIONS
Education loan compound interest calculator questions
Does interest build up on an education loan while I study?
Often, yes. Many education loans charge interest during your course even though you don't have to repay yet, so the balance grows.
How much will a £20,000 education loan grow during a 4-year course?
At 8% compounded monthly with nothing repaid, it would grow to £27,513.32 by the end of the course.
Can I reduce the interest that builds up?
Paying some interest while you study, or borrowing only what you need when you need it, keeps the balance lower. Check whether your loan allows early payments.
Does this show my repayments after I graduate?
No. It shows the balance when repayments start. Use the education loan repayment calculator to see what you'd pay after that.