Fixed-Rate Loans: Amortization Table

Written by: Kristyn Pilgrim
Updated: 4/06/20

Student loans are incredibly important, as they allow students who might otherwise struggle to attend college to get an education. There are many types of student loans available, and utilizing student loans to help pay for a college degree is increasingly common. 

In 2018, 65% of college seniors in both private and public nonprofit colleges had student loan debt averaging just under $30,000. That number has increased dramatically since 1996 when it was slightly less than $13,000 ($21,720.36 when adjusted for inflation).

After receiving a loan, however, one must make plans for repaying that loan, or multiple loans. For fixed-rate loans, where the interest rate does not change over the life of the loan, it is possible to calculate how much interest you will pay and understand the real cost of the loan. One tool that makes it simple to calculate these numbers is a fixed-rate loan amortization table.

What is a fixed-rate loan amortization table? It’s a table that allows the user to visualize and calculate how much principal and interest will be paid over time. It applies to situations where the debt will be paid off in equal installments, with part of the payment going toward the principal and part going toward the interest.

Amortization tables display the scheduled payments by month for the length of the loan, how much money goes toward interest (by multiplying the remaining loan balance and the monthly interest rate), and how much goes toward the principal. 

Over time, your balance will decrease when paying back a fixed-rate loan. At the beginning of the repayment process, your monthly payment will cover more interest than principal. However, as you continue repaying your loan, more payment will go toward the principal, and you will be paying less interest each month. An amortization table will allow you to see the true long-term costs of borrowing a certain sum of money.

Different Types of Loan Amortization Tables

There are simple tables that allow the user to input the loan type, amount, term, and interest rate. More complicated tables, such as this one designed for mortgage rates, allow the user to specify a down payment, payment frequency, interest rate, term, payment type, payment amount, principal, and interest. 

For more visual learners, this calculator creates charts illustrating how a balance decreases over time, including interest, principal, and balance. If you are interested in a multi-year schedule, this calculator provides numbers for the term of the loan.

Evaluating Loans Using Amortization Tables

There are many different types of loans available, with different payment schedules, interest rates, and term lengths. In order to make the most educated decision when choosing a student loan, amortization tables are a great tool for determining which loan would be the best fit.

Amortization tables work best for evaluating the following loan types:

  • Loans that are lump-sum
  • Loans that are paid over time
  • Loans with a fixed monthly payment
  • Loans with fixed interest rates

By evaluating different loan options from different lenders, it is possible to determine which loan is best for you before making a commitment. For example, if you are considering a 15-year loan and a 30-year loan, the amortization table will help you determine whether it is best to repay your loan quickly over 15 years or whether slower payments are more beneficial.

Build Your Own Amortization Table

Though there are many types of amortization tables, there is also the option to create your own amortization table. By creating your own, you can add variables that fit your needs and truly understand the impact of interest on a loan.

Here’s how:

  1. Create a spreadsheet with six columns.
  2. Label the first column “payment amount.”
  3. Label the second column “interest rate.”
  4. Label the third column “remaining loan balance.”
  5. Label the fourth column “interest paid.”
  6. Label the fifth column “principal paid.”
  7. Label the sixth column “month/payment period.”

From there, fill in the columns for the loan amount and the interest rate, then calculate what the interest is for the loan amount by multiplying the monthly loan payment by the interest rate. 

Take, for example, a $5,000 loan, with a 5% interest rate, and payments of $600 a month.

Payment Amount Interest Rate Remaining Loan Balance Interest Paid Principal Paid Month/Payment Period
$600 0.05 $5,000 $250 $350 1
$600 0.05 $4,650 $232.50 $367.5 2
$600 0.05 $4,282.50 $214.125 $385.875 3
$600 0.05 $3896.625 $194.83 $405.16875 4

By building your own amortization table, you can add extra payments and see how they impact your loan balance.

Other Uses for an Amortization Table

While an amortization table is best for a lump-sum loan with a fixed interest rate, it is also useful for calculating payments for non-fixed rate loans for the duration of the loan period. It will help you understand how much of the payment goes toward the principal and how much goes toward the interest. 

Comparing Amortized Loans with Other Loans

Three common loan types are amortized loans, balloon loans, and credit cards (which have revolving debt). Amortized loans – those with a fixed payment amount, where the payment is first applied to the interest – take place over a fixed extended time period. Examples of amortized loans are 5-year or less auto loans, 15-year or 30-year home loans, and personal loans.

Balloon loans are short-term, with part of the principal amortized. At the end of the term for a balloon loan, the remaining balance is due and is often more than double the amount of previous payments.

With credit cards and revolving debt, the payments vary as the loan amount varies. The numbers with these types of loans are based on spending, and therefore lack the predictability of balloon or amortized loans. 

Federal Student Loans

Federal student loans, just like any other type of loan, carry a legal obligation to repay the amount borrowed with interest. 

Federal Student Aid, An Office of the U.S. Department of Education, offers extensive information about student loan repayment, whether you are a current student, preparing to be a student, a graduate, ready to graduate, or have already graduated. These tools can help you estimate your federal student loan repayment, begin making payments, and choose a repayment plan, among many other options. 

The financial aid office at your college or career school will determine the amount of federal financial aid for which you are eligible by evaluating various factors. They will start with the cost of attending that school (such as tuition and fees, room and board, books, supplies, transportation, loan fees, and other expenses), along with what your family is expected to contribute. Then, financial aid staff determines your financial need and calculates your non-need-based eligibility based upon the cost of attendance and any financial aid you’re going to receive.

The Federal Student Aid website facilitates the consolidation of loans and loan payments if you’re falling behind, as well as information to understand aid, apply for aid, complete the aid process, and manage your student loans.

Types of Federal Student Loans

The U.S. Department of Education acts as a lender through the William D. Ford Federal Direct Loan Program, often referred to as the Direct Loan Program. Within the Direct Loan Program, there are four types of direct loans:

  • Direct Consolidation Loans
  • Direct PLUS Loans
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans

Direct subsidized loans are based on financial need for eligible undergraduate students. Direct unsubsidized loans are based on eligibility. Direct PLUS loans require a credit check and are for graduate or professional students, as well as parents of undergraduate students. Direct PLUS loans help to cover expenses that have yet to be covered by other types of financial aid. 

This guide offers a comparison of subsidized and unsubsidized loans along with their implications. The way the interest is calculated for subsidized loans is different from how it is calculated for unsubsidized loans. As long as you are at least a part-time student, interest is deferred with subsidized student loans until after graduation, when you will begin paying interest. With unsubsidized student loans, they start accruing interest as soon as you receive funds.

Federal Student Loan Financials

There are maximum amounts you are able to borrow for any given loan, but it is also possible to borrow less than the maximum amount. Additional loan funds can be requested at a later date.

Direct unsubsidized loans for graduate or professional students cap out at $20,500 a year. For undergraduate students, direct subsidized loans and direct unsubsidized loans can range from $5,500 to $12,500 a year. 

Federal loans offer a fixed interest rate that is typically lower than that of a private loan. Flexible repayment plans and options to postpone loan payments, in addition to federal student loan forgiveness for certain jobs, help make repayment as painless as possible. For students demonstrating a financial need, the U.S. Government assists with the interest on specific loan types while pursuing higher education and for some time after graduation.


To determine your eligibility for federal student loans, it is necessary to fill out the Free Application for Federal Student Aid form, also known as the FAFSA. After submitting your FAFSA form, you will receive a financial aid offer from your college or career school that will let you know what student loans you are eligible for, and they will advise you on whether to accept all or part of the loan.

Private Loans

Private loans come from providers such as banks, credit unions, state-based or state-affiliated organizations, or companies that specialize in providing student loans. 

Because these loans are not managed by the government, the terms and conditions can vary. Organizations and institutions have the option to change the interest rates and terms of a private loan. As a result, it is important to monitor any changes that may occur.

For the 2019-2020 school year, private student loans have a fixed rate of 4.55-13.98%, and variable rates from 3.75%-13.19%, compared to the average interest rate of 4.53% for federal student loans. Federal graduate student loans have a fixed rate of 6.08%, and PLUS federal loans have a 7.08% fixed interest rate.

However, private loans may require repayment while you are still in school, have fixed or variable interest rates, and they may require a credit check and a co-signer. On the plus side, the interest may be tax-deductible depending on the type of loan.

Evaluating Financial Aid

According to Federal Student Aid, there are three key factors for determining which financial aid is best. First, students should accept free money through grants and scholarships, then earn money through programs such as work-study. Finally, borrowed money, such as federal student loans, should be accepted to assist in the costs of higher education.

Federal Student Aid suggests that students accept scholarships and grants first while being mindful of any conditions such as maintaining a certain grade-point average. If students fail to remain eligible, grants can turn into loans. On the same note, choosing to participate in work-study requires efficient time management skills. It’s also incredibly important to be mindful of interest rates and loan repayment plans when considering federal loans. While these offer more favorable terms, they are still a commitment that can have long-lasting consequences if the terms are not met.

All of these options may require careful consideration, but private loans should be approached with the most caution. Private companies don’t offer as many benefits or repayment options as federal loans and often come with higher interest rates that can add up significantly over time.

Seeking Advice

Understanding fixed-rate loans and an amortization table to calculate payments can be a confusing process. Whether you are exploring government loans, private loans, grants or scholarships, evaluating your financial aid choices is important. Be sure to visit CollegeFinance to take advantage of our numerous resources, products, and services that can help guide you through the financial aid process before, during, and after your journey toward achieving a higher education.