A student loan repayment calculator is a tool that helps borrowers determine the best plan for repaying their student loans. The calculator takes into account the loan amount, interest rate, and loan term to provide a comprehensive overview of the borrower’s options for repayment.
How to use the Student loan Repayment Calculator?
The first step in using a student loan repayment calculator is to enter the loan amount and interest rate. The loan amount is the total amount borrowed for education expenses, while the interest rate is the annual percentage rate (APR) that the borrower is charged for borrowing the money.
Once the loan amount and interest rate are entered, the borrower can then choose the loan term. The loan term is the amount of time the borrower has to repay the loan, typically ranging from 10 to 30 years.
After entering the loan information, the student loan repayment calculator will provide a breakdown of the monthly payment and the total interest paid over the life of the loan. The calculator also allows the borrower to compare different loan repayment options, such as the standard repayment plan, income-driven repayment plans, and loan consolidation.
What is Student Repayment Plan?
The standard repayment plan requires the borrower to make a fixed monthly payment for 10 years. This option results in the lowest total interest paid over the life of the loan but may have a higher monthly payment compared to other options.
Income-driven Repayment Plans
Income-driven repayment plans, on the other hand, base the monthly payment on the borrower’s income and family size. This option may have a lower monthly payment but may result in a higher total interest paid over the life of the loan.
Loan consolidation allows the borrower to combine multiple federal student loans into one loan with a new interest rate and repayment term. This option may result in a lower monthly payment, but it may also extend the loan term and result in a higher total interest paid over the life of the loan.