Juanita takes out a federal unsubsidized loan for $13,900 with an interest rate of 6.6% , a term of 10 years, and payments deferred until 6 months after graduation. She decides not to capitalize the interest.

Juanita has taken out a federal unsubsidized loan for $13,900 with a 6.6% annual interest rate over a term of 10 years. The key detail here is that the interest begins accruing immediately, but the payments are deferred for 6 months after graduation. Since Juanita chooses not to capitalize the interest, she will be paying the accrued interest separately rather than adding it to the loan principal.

### Steps to calculate the interest accrued during the deferment period:

1. **Interest rate and loan balance**: The annual interest rate is 6.6%, so the monthly interest rate is:
   \[
   \text{Monthly interest rate} = \frac{6.6\%}{12} = 0.55\%
   \]

2. **Accrued interest during deferment**: Interest will accrue on the loan balance during the period Juanita defers her payments (the period before payments start, which includes her time in school and 6 months after graduation). If the loan is deferred for the duration of her studies (say 4 years) plus 6 months after graduation, the total deferment period is 4.5 years, or 54 months.

3. **Interest formula**: The interest Juanita will accrue each month during deferment is calculated using:
   \[
   \text{Accrued interest} = \text{Loan balance} \times \text{Monthly interest rate}
   \]

   For each month, the interest accrued is:
   \[
   13,900 \times 0.55\% = 76.45 \text{ USD}
   \]
   
4. **Total interest accrued during deferment**:
   Over 54 months of deferment, the total interest is:
   \[
   76.45 \times 54 = 4,127.85 \text{ USD}
   \]

This means that Juanita will accrue **$4,127.85** in interest during her deferment period. Since she chooses not to capitalize the interest, she will be responsible for paying this interest separately, in addition to her regular loan payments once they begin.

Would you like more details on the repayment schedule or how the total cost of the loan is impacted?

---

Here are 5 related questions to think about:
1. What would be the impact of capitalizing the interest instead of paying it separately?
2. How does the length of deferment affect the total interest accrued?
3. What happens if Juanita makes interest payments during school?
4. How does the interest rate change the total loan cost?
5. What are the differences between subsidized and unsubsidized loans?

**Tip**: Paying off interest during the deferment period can reduce the total amount you pay over the life of the loan.

Juanita takes out a federal unsubsidized loan for $13,900 with an interest rate of 6.6%, a term of 10 years, and payments deferred until 6 months after graduation. She decides not to capitalize the interest.

Learn how to calculate the interest accrued on a federal unsubsidized loan of $13,900 with a 6.6% interest rate over a 10-year term, deferred for 4.5 years. Explore the impact of choosing not to capitalize interest during deferment. Suitable for high school students studying financial mathematics.

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