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.

Don’t forget to post a comment about what you learned right here on One For Your Money to be entered for a chance to win a $25 gift card*!

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.

 

*Details and official rules here

Posted on April 7, 2014 at 7:29 am 3 comments

Categories: Challenge 2014, Financial Aid, Managing Debt, Money 101

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3 comments

  1. dbroome50 Says:
    April 8, 2014 at 7:01 am

    It is important to know what your monthly payments will be once you graduate from college. Knowing that student loans must be repaid is very important. Making payments on time will make a positive impact on your credit score. Some are eligible for federal loan forgiveness and income-contingent programs. It is a good idea to research and find out if you are eligible for any of the programs.

  2. tavia8910 Says:
    April 8, 2014 at 1:10 pm

    I learned that I do not want to wait to pay my loan. I don’t have to start paying on my loan until 6 months after I graduate. I only took out one loan for under $4,000. I want to pay that as soon as I graduate or during that 6 month period. That would be the best thing for me to do personally. I have to save now and always keep that in the back of my mind with my fiance.

  3. AlexisElac18 Says:
    April 21, 2014 at 11:49 am

    Taking out student loans is quite a challenge, especially if you are low on budget. Not paying your monthly student loan minimum payment can not only affect you financially, but it can also hurt your credit score, which can negatively affect you from buying a home, taking out a mortgage, buying a car, applying for a credit cards…etc., Always do your research when making the decision of taking out a student loan, know the required monthly minimum payment. I learned that before taking out a student loan, there are other opportunities to help lower the cost of college such as scholarships, grants, donations, selling unwanted items online, and part-time jobs. Taking out a student loan is very serious decision.

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