Student Loan Calculator
College students today are borrowing to an extent many characterize as a crisis. Media coverage of student loan debt can have a positive impact to the extent that it encourages current students to borrow responsibly.
Benefits of a Loan Calculator
Part of borrowing responsibility includes reviewing federal and private loan terms and utilizing a student loan calculator to estimate the future monthly amount due on the loan. To make the most of a student loan calculator, students are advised to have the following information ready:
- Initial amount of the loan
- Applicable interest rate
- Duration of the loan
Students can make the most of a student loan calculator when using it to compare the monthly amount due under different repayment plans. A student loan calculator is helpful not only to prospective college students, but also to those in repayment as well. While your loan servicer will provide the bottom line dollar amount due each month, per the repayment plan selected, borrowers can use a student loan calculator to explore any available benefits from other repayment plans.
Federal Student Aid provides a useful Repayment Estimator tool that breaks down monthly payment by repayment plan type. To the extent a consolidation changes the terms of the original student loan, borrowers are best advised to use a student loan calculator to estimate the new monthly amounts.
According to Federal Student Aid of the U.S. Department of Education, borrowers who have their monthly payment automatically debited from their bank account – the electronic debit account (EDA) program – will receive a 0.25 percent decrease in the applicable interest rate on eligible loans. Borrowers enrolled in EDA will want to factor this reduced rate into their student loan repayment budget.
Once the estimated monthly amount is calculated, prospective student borrowers are well advised to consider salaries in their career of interest. Although schools often do not require students to declare a major, many students may be clear on their intended course of study and career goals. Having a realistic understanding of earning prospects by field of study can help students determine if they will be able to meet their future loan repayments.
According to CNN Money, the class of 2012 graduated with an average debt of $29,400. The National Association of Colleges and Employers reports that the average starting salary for class of 2013 graduates with full-time jobs was $45,327, while the average for 2012 graduates was $44,259 (a 2.4 percent increase). Based on this data, and a general consensus among analysts, college continues to be worth the cost of attendance.
For students who are keeping their college major and career choices open and would like to fast-track student loan repayments, the following are a sample of majors with the biggest salary payoffs, according to Fortune:
- $100,000: Pre-med
- $85,000: Computer systems engineering
- $84,000: Pharmacy
- $73,000: Computer science
- $72,200: Physics and astronomy
- $63,300: Economics
- $63,000: Financial management
Not all students will pursue the most lucrative majors, but every student can responsibly plan to pay for college. An additional helpful way to use a student loan calculator is to compare the cost of attendance at different schools. Factoring in salary prospects, a student may consider attending a school with a cost of attendance in line with future earnings.