Potential Magazine College Organizer 2019 | Page 51
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student loans 101
College Loans:
What You Give Up
Plenty of students and/or their families have
to borrow money to afford college, but when it
comes to student loans, it’s easy to get in over your
head if you’re not educating yourself. Here’s what
you need to know about loans, and how to know
when to say when!
To pay off a $25,000 student loan, your
payments would be between $150-200 a
month, roughly a used car payment. You
would need a salary of $30,000 - $40,000
to pay it off in 20 years.
Too many students are reaching graduation full of excitement
only to be hit with a harsh reality: the sizeable chunk of money
that paying off student loans will take out of their budget. Un-
fortunately, most young adults are often unaware of what their
debt will cost them each month until they see their first student
loan bill. Don’t be caught by surprise!
To pay off a $50,000 student loan, your
payments would be around $300-390 a
month, a new car payment. You would need
a salary of $40,000 - $50,000 to pay it off
comfortably over 20 years.
Interest-ing?
Maybe not, but it is important. Interest is the money you pay to
your lender in exchange for borrowing money, and is calculated
as a percentage of what you borrow. Without interest, lenders
would have no incentive to give out loans; in order to make it
worth their while, they expect to get back from you more than
you borrowed.
To pay off a $75,000 student loan, your
payments would be around $450-580 a
month, equivalent to monthly apartment
rent for 20 years. You would need a salary of
$60,000 to afford this payment.
Looking at the Average:
The average student loan debt in 2016 was $37,172. Let’s assume
that you are the average borrower, and have a Stafford student
loan with an interest rate of 6.8%.
If you pay roughly $280 per month toward your loan, you will
have paid $30,927 in interest alone, for a total of $68,099. That’s
almost double what you originally borrowed, and it will take you
twenty years to do it!
loan
To pay off a $100,000 student loan, your
payments would be around $600-775 a
month for 20 years, equivalent to a modest
mortgage payment. You would need a salary
of $80,000 - $90,000 to afford this payment.
interest
total
$37,172 + $30,927 = $68,099
what y ou
borrow
t h a t ’s
a car!
To pay off a $150,000 student loan, your
payments would be around $900-1200 a
month, equivalent to a house and car
payment. You would need a salary of
$100,000+ to pay it off in 20 years.
what y ou
pa y
*Amounts may vary; some loans require a certain minimum monthly payment
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