Example

Solving a Student Loan Interest Application Using a System of Equations

To determine the separate principal amounts for different loans when only the total principal and total interest are given, set up a system of equations by adapting mixture models. For example, if Rosie owes $21,540\$21{,}540 on two student loans—a bank loan at 10.5%10.5\% interest and a federal loan at 5.9%5.9\% interest—and her total interest paid last year was $1,669.68\$1{,}669.68, let bb be the bank loan principal and ff be the federal loan principal. The total loans equation is b+f=21,540b + f = 21{,}540. The total interest equation is 0.105b+0.059f=1,669.680.105b + 0.059f = 1{,}669.68. Using substitution, this system yields f=12,870f = 12{,}870 and b=8,670b = 8{,}670. The principal was $8,670\$8{,}670 for the bank loan and $12,870\$12{,}870 for the federal loan.

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Updated 2026-04-25

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