Stephanie has $42,750 in student loans at a 6% compound interest
rate. If she decides to defer payment on the loan for two years, how
much additional interest will be added to the loan at the end of the
two-year deferment?
You first take the annual interest rate on your loan and divide it by 365 to determine the amount of interest that accrues on a daily basis. Say you owe $10,000 on a loan with 5% annual interest. You'd divide that rate by 365 (0.05 ÷ 365) to arrive at a daily interest rate of 0.000137.
