Figuring out your student loan payment can be tricky. Some loan calculators are hard to use and don’t offer all the information you need to figure out what you’ll have to pay, and some offer too much information that might be overwhelming for someone just starting to pay back their loans. This guide on calculating student loans will give you everything you need to understand your loan payment amount and help you plan your budget based on what you’ll have to pay back each month after graduating from college.
Determine Your Interest Rate
To calculate student loan interest, gather your most recent statement and have it at hand. Then plug your numbers into a free online calculator. Depending on your loan type, you may have a fixed or variable interest rate.
Add up the total number of months you have been in school. Then, divide that by 12 and multiply by your interest rate percentage. The result is your monthly student loan interest rate.
If you don’t know your interest rate, ask your lender. It should be a few percentages lower than the standard interest rates for other types of loans. For example, as of September 2017, federal student loans carry an interest rate of 4.45%. On the other hand, private student loans can have interest rates as high as 17%.
Use Student Loans Calculators
Using a student loan calculator is the first step in figuring out your monthly student loan payments. You can find these calculators on websites like NerdWallet and SmartAsset, as well as on the lender’s website from which you received your loan.
Using a student loan calculator, you can determine how much you will pay each month. The following are some of the features you’ll want to take into account when using a student loan calculator:
– How much do I need to make each month?
– What is my current interest rate?
– What’s the length of my repayment term?
– How much will I owe if I don’t pay anything extra over the course of this term?
After considering all of these factors, you should be able to determine how much your monthly student loan payment will be.
Refinance Student Loan Rates
If you’re paying high-interest rates on student loans, refinancing is one of your best options for saving money. Refinance lenders offer some of the lowest rates around, and they can help you consolidate multiple loans into one.
Remember that refinancing your student loans will not impact your credit score. And according to Lantern by SoFi, (one of our favorite places for student loan advice), borrowers who refinance are less likely to default on their loans than those who do not refinance.
It’s important to remember that even if you take on debt for your education, earning a degree is still one of your best investments. The average graduate will earn $1 million more over their lifetime than someone with just a high school diploma. You’ll also be able to get better-paying jobs and be eligible for higher government grants and scholarships.
