Gertrude takes out a $5,500 subsidized Stafford loan, which must be paid back in ten years. Gertrude will graduate four years after taking out the loan. If the loan has an interest rate of 6.8%, compounded monthly, and Gertrude makes monthly payments, how much interest will she pay by the time the loan is repaid? Round all dollar values to the nearest cent.

Because the loan is subsidized, interest does not accrue during Gertrude’s four years in school. For repayment, use a monthly rate of 0.068 ÷ 12 and 120 monthly payments; the amortized payment is about $63.29. The total paid is $63.29 × 120 = $7,594.80, so the interest is $7,594.80 − $5,500 = $2,094.80. The correct choice is $2,094.80.

AI-written and checked against the verified answer.