Challenge Week 2: Understand Your Student Loan Payment
Student loans are a major financial responsibility, so be sure to keep track of how much you owe and what your likely monthly payment will be when you graduate or leave school. This week’s challenge is to estimate those monthly payments using this handy student loan calculator.
Remember, this is only an estimate to give you some idea of what your monthly payment might be once you have completed your college education. Also, most student loans require a minimum monthly payment no matter the size of the loan, so be sure to check with your lender.
Not sure how much you owe? You can find out your federal student loan balance by visiting the NSLDS website.
It’s also a good idea to compare your monthly student loan payments to your expected starting salary when all your hard work pays off with that degree! You’ll want to keep your loan payment to less than 10 percent of your monthly salary in order to comfortably afford them.
Here is a link to some good information from the U.S. Department of Labor’s Bureau of Labor Statistics on wages by occupation. Pick the occupation you are interested in and then you can search nationally or by specific state/region. It may take a few clicks, but once you find the annual wages as for the job you think you might qualify for (the 10th percentile is a good proxy for starting salary instead of the median annual wage), simply divide by 12 to get the monthly rate. Then, just multiply by 10%.
For example, a Computer Support Specialist might expect a starting salary of about $29,000, or $2,417 per month. Ten percent of that monthly total is $242, so you’ll want to keep your expected loan payments at or below this level.
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What Should I Know About Student Loans?
- If you take out a student loan, your school is required to provide you with both Entrance and Exit Counseling so you understand the loan terms and your rights and responsibilities.
- Student loans must be repaid, even if you do not finish your degree, are unable to find a job, or are not satisfied with your education.
- Think carefully about much you borrow to attend college. The amount of money you owe may affect your lifestyle after your leave school.
- Your actual monthly loan payment is determined by the loan holder.
- Most private loans are credit-based loans and the interest you pay is based on how good your credit is; the better your credit, the lower your interest rate.
- Always make your loan payments on time.
- There are several federal loan forgiveness and income-contingent programs available which you may be eligible for.