If monthly variable is used, the overall cost could be lower. One disbursement of loan funds. Interest is calculated with a yearly rate, not a monthly or daily rate or continuous rate. Immediate monthly repayment of interest begins during enrollment. This formula would only be utilized as an estimation tool for calculating the value of the loan the onset of loan repayment.
Interest paid during enrollment is added to the cost of the loan.
Although payments are made during enrollment and cannot be deffered until later, they are a real expense and are thus included in the calculation of the cost of the loan. Using the above information and assumptions, the following formula can be used to estimate the total cost of a loan. What is somewhat unique about this loan is that the student makes interest payments while attending school. Of course, whatever interest was paid while enrolled is a real cost to be added to the loan. Therefore the full loan cost will be the interest paid while in school plus the monthly payment times the number of months those payments have to be made.