2015 Challenge Week 3: Understanding 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 payment calculator.

Remember, this just gives you a ballpark figure 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 balances by visiting the NSLDS website.

It’s also a good idea to compare your monthly student loan payments to your expected starting salary. You’ll want to keep your loan payment to less than 10 percent of your monthly salary.

Here is a link to some good information from the U.S. Department of Labor’s Bureau of Labor Statistics on wages by occupation. Once you find your expected occupation, you can search nationally or by specific state/region. It may take a few clicks, but once you find the annual wages 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 your monthly salary, then multiply by. 10 to get the maximum amount your monthly student loan payment should be.

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 how 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-based repayment programs that you may be eligible for.

For additional information about these and student loans in general, visit StudentLoans.gov.

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Higher One: Challenge Week 3: Understanding Your Student Loan Payment

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Showing 12 comments
  • AT Otto

    I haven’t taken any school loans out yet, but I will need to. This was interesting to learn more about loan payments. I will keep this in mind before I take out any future loans.

  • AlexisElac18

    The profession I want to work in is as an (RN) Registered Nurse. The annual salary of a registered nurse working in Los Angeles is $50,574. So the monthly total I am expected to pay for my student loans is $412. I believe that it is a large amount of money I would have to repay each month towards my student loans. And from what I have learned from this activity is that saving money is crucial, especially if borrowed money from student loans. Unable to pay on time each month increases the interest rate and increases the monthly payment. Therefore, it is important to take student loans very seriously and know the rules of repayment. A small error can end up costing you more. Like the saying goes, every penny counts.

  • Devann Matthews

    I was intrigued to learn that there were so many different repayment options. The option that stood out to me was the Income Sensitive Plan.The details of this plan states that monthly payments are based on the annual income, therefore may change as your income changes. This information was extremely helpful!

  • Elizabeth

    As a financial advisor in Florida, it looks like my monthly payments would be no more than $481, to stay under 10%. I owe 8000 right now but will probably be up to 16000 by the time I’m finished. I think $481 is a lot a month. I have started to save money already but I don’t know if I will have enough saved by the time I’m out of school. Thank god for the grace period.

  • SARAH CHANEY

    So far I only have about 15,000 in student loans, I want to make sure that I try to keep my loan amount as low as possible with a good interest rate so I am not stuck in debt after I graduate.

  • Khadijah Jihad

    I learned allot I picked a career to go into that would make easy for me to pay my student loans off..This article helped jumpstart the process and give me knowledge for after I graduate

  • Dee

    I was surprised to learn there were so many payment options. I owe quite a bit in student loans and I found this very informative.

  • robert coleman

    Im thankfull for the help that the Loan give me it help me to Have my dream come true ..

  • Ashley

    I definitely learned that I need to keep track of my student loans, and know my repayment options!! Thanks! :)

  • Cheryll

    This was interesting. I’m glad I was able to get a loan in helped on so many ways. Thank you for listing the loan forgiveness- government site. There are just so many scams out there this will help me find the right information.

  • Gabriella

    What a very helpful tool! This surely brings light to how much you can realistically afford to borrow.

  • andrew

    Student keep preparing and have faith.