Bianca took out a $2,600 unsubsidized Stafford loan. She will be attending school for four years, and she wishes to have the loan paid off five years before its normal ten-year duration is finished. The loan has an interest rate of 6.2%, compounded monthly. How much will she have to pay monthly to avoid interest capitalization?

To avoid interest capitalization, Bianca must pay the interest that accrues each month while she is in school. The monthly interest is $2,600 × (0.062 ÷ 12) = about $13.43. Therefore, the correct choice is $13.43 per month; the payoff schedule does not change the monthly interest on the loan balance.

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