Student Loan Calculator Review

A student loan calculator is a financial tool that lets you determine how much you will have to pay each month after graduation on the money you borrow to attend college. Having this kind of information in advance can help you make decisions about where to attend school, how much you should borrow, and even what to choose for a major.

Getting a realistic idea of the cost of your education and a plan for paying it back is not the most fun you will ever have in an afternoon, but it can save you a lot of trouble down the road. As the cost of a college education gets higher and higher, and the job market gets tighter and starting salaries lower, having a plan can reduce anxiety and help you concentrate on your studies and your future.

FSA, the Federal Student Aid website, has a variety of helpful calculators plus the current interest rates on federal student loans at:

http://www.ed.gov/offices/OSFAP/DirectLoan/calc.html

One repayment plan calculator at the FSA website breaks down different federal student loans into standard, extended, and graduated payment plans. For example, a $50,000 Stafford loan balance can be repaid in monthly instalments of $575.40 for 120 months on the standard repayment plan.

The extended repayment plan spaces that term out to 300 months, which reduces the monthly instalment to $347.04.

The graduated plan resets to a higher amount every two years, so the first two years are reduced to $287.70 each month.

An income contingent plan calculator at FSA lets you calculate how much your payment will be each month based on your annual income after graduation. Say you borrow the same $50,000 but can’t find anything except a $20,000/year entry level job in banking when you graduate. At that income level, you will pay $167.13 each month until you can make more money.

Many banks do offer refinancing options for consolidating student loan debt into one payment, and provide student loan calculators to help you estimate you monthly savings. Chase has a good one available at http://www.chaseconsolidationprogram.com/ You plug in the amounts of your different loans, and it gives you an approximate consolidated single monthly payment.

A really depressing student loan calculator is available at the CNN finance page at: http://cgi.money.cnn.com/tools/studentloan/studentloan.html

Plug in the same $50,000 student loan debt at a $300 monthly payment and you will see that the loan will be paid off in only 48 years, with a total loan cost of 103,453. If you are still stuck in that $20,000 entry level job, sorry, but you will never pay off your student loan debt at $167.13. That’s right, you will die first. It’s hard to know what to do with information like that. Study: that might be one response. Study your brains out and score some scholarship money.