Tamora has just graduated from college. When she entered college four years ago, she took out a $9,100 subsidized Stafford loan, which has a duration of ten years. The loan has an interest rate of 5.4%, compounded monthly. If Tamora makes monthly payments, how much interest will she have paid in total by the time the loan is paid off? Round all dollar values to the nearest cent.

A subsidized loan does not accrue interest while Tamora is in college, so calculate interest over the 10-year repayment period. The monthly interest rate is 0.054 ÷ 12 = 0.0045, and there are 10 × 12 = 120 payments. Using the monthly loan-payment formula gives a payment of about $98.31, so total interest is 120 × $98.31 − $9,100 = about $2,697.20. The correct choice is $2,697.20.

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