Why Interest Stinks (When Working Against You)

When I first began making payments on my student loans in 2015, I owed about $55,000 at a 7.5% interest rate, and was paying $11 per day in interest alone.

If your student loan accrues interest daily, and you don’t know the amount of interest you’re paying on your loan each day, you can calculate the interest you’re paying right now in 3 easy steps:

Step 1: Log in to your loan website and get your principal (the total amount you owe) (ex. $55,000)

Step 2: Then, get your interest rate (ex. 7.5%)

Step 3: Perform the following calculation with those 2 numbers:

( Total Amount You Owe * Interest Rate ) / 365 days in a year


($55,000 * .075 )  / 365

Don’t feel like doing the math? Check out the link below for a simple excel spreadsheet that’ll do the work for you. Just download the spreadsheet, punch in your principal and interest rate, and it’ll tell you what you’re currently paying in interest. Let me know if you need help!


So… How much are you paying in interest today? If this number freaks you out, first of all… sorry! But second, it’s really good for you to know. This insight is what sparked me to pay more attention to my student loan and where my money was going, and I hope the same for you!

Again, I was paying about $11 a day in interest at one point. That meant when I went to make my $400 monthly payment, a huge majority of it (about $340) went toward the interest itself, and very little of my hard-earned cash (about $60) went toward paying down the actual amount I owed.

Not exactly ideal, and pretty discouraging. Especially when you think big picture. I paid around $4,000 in interest and barely touched my principal that year. It really felt like I had nothing to show for all that money I threw toward my debt. And I know I’m not alone. Here’s what a Facebook friend had to say about her loans recently!


So, you might be thinking… is there any good news here?

Yes, there is. The good news is that whatever you’re paying in interest today will lessen as you pay down your Principal. You can see this for yourself if you lower your Principal in the calculation above.


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About Taylor

A few years after graduating college, Taylor made it her mission to become debt free. After paying off all $60k of debt, she began to blog about what she's really passionate about: personal development. Nowadays, Taylor blogs about the topics of Mindset, Money, Health, and Career for women. Read more about Taylor here.

"It's Per$onal" is a super popular and anonymous blog series about the personal lives and finances of women all over the world. Check it out!

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