Sorry if this is a little OT, but this is the best place I can think of to ask this question.

I was studying my student loan statements and the interest seems to be a little higher than I would expect with my limited math skills. I can't quite wrap my head around the finer points of amortization, but I'd expect my monthly interest payment to be in the ballpark of Principal * APR /12. Is there something I'm missing? Consider the the numbers from one of my loans below. It seems that I am paying about 15% more than I should, and since this goes for several loans over many years, the difference could be thousands of dollars.

Principal: $2,892.19
APR: 7.940%
Their calculated interest: $22.41
My calculated interest : $19.14

Thanks

You'll probably have to look at the way that they capitalize unpaid interest. That's probably throwing off your math.

In the private loans that I work on: The interest is calculated daily. (interest rate/365) *principal = interest for the day. Then all that unpaid interest gets summed up at the end of the quarter, and it becomes principal as well.

Thanks! I've sent an email to my loan company since I couldn't find any info on their website about how they compound. I seem to remember that they compound daily. You brought up something I hadn't thought about though - some months are longer than others.

I'm guessing that they are doing their math right. But I got worried when I ran my loan through an amortization scheduler and expected to pay around 100 / month in interest. Then I got my bill and found that it was almost twice what I expected.