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Monthly payment on a $30,000 student loan at 5% for 10 years

A $30,000 loan at 5% over 10 years costs $318.20 a month. You pay $8,184 in interest, $38,184 in total.

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The numbers for these inputs

YearPrincipal paidInterest paidBalance left
1$2,372$1,446$27,628
2$2,494$1,325$25,134
3$2,621$1,197$22,513
4$2,755$1,063$19,758
5$2,896$922$16,861
6$3,044$774$13,817
7$3,200$618$10,617
8$3,364$454$7,253
9$3,536$282$3,717
10$3,717$101$0

How it works

A fixed-rate loan is repaid with the same payment every month. The payment is chosen so that, after the last one, the balance is exactly zero: payment = amount x r / (1 - (1 + r)^-n), where r is the monthly rate (yearly rate / 12) and n is the number of months.

Each month the interest is the balance times r. The rest of the payment reduces the balance. Early on most of the payment is interest; later most of it is principal, which the year-by-year table shows.

The result does not include fees, insurance, taxes or a variable rate. Your lender's figure can differ a little, so use this to compare options, then ask for the official schedule.

Common mistakes

  • Comparing loans by monthly payment alone: a longer term lowers the payment but raises the total interest.
  • Forgetting that the quoted rate and the APR can differ once fees are included.
  • Not checking whether extra payments go to principal; paying a little extra early saves the most interest.
  • Using the headline rate for a variable-rate loan, which can rise.

Questions

What is the monthly payment on $30,000 at 5%?

$318.20 a month for 120 months, assuming a fixed rate and equal payments.

How much interest will I pay in total?

$8,184, which is 27.28% of the amount borrowed. The total repaid is $38,184.

How do I pay less interest?

Choose a shorter term, make a larger down payment, or pay extra toward the principal. Change the term slider to see the trade-off between payment and total interest.

Does this include fees or insurance?

No. It covers principal and interest only. Add origination fees, insurance or property taxes separately; for a mortgage they can add a large share to the monthly cost.

Why is the first year mostly interest?

Interest is charged on the remaining balance, which is highest at the start. As the balance falls, a larger part of each equal payment goes to principal.

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