pay the way
student loans 101
College Loans:
What You Give Up
Plenty of students and their families have to
borrow money for college, but when it comes to
student loans, it’s easy to get in over your head.
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.
Many students reach 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. Unfortunately, most
are unaware of what their debt will cost them each month until
they see their first student loan bill. We’re here to help make sure
you aren’t 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. Interest 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!
what y ou
pa y
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.
*Amounts may vary; some loans require a certain minimum monthly payment
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Summer 2017
www.potentialmagazine.com