A Calculator for student loan repayment with yearly amortization (Free Tool)

Calculator for student loan repayment

Are you a student who needs help covering the break-neck cost increases of higher education? If you’re like most people, you need some kind of financial aid to pay some or all of your yearly tuition. You can avoid a lot of extra loan costs by comparing lender terms with a calculator for student loan repayments.

There are a wide range of financing options, including most banks and credit unions as well as dedicated online lenders. The main reason for granting these funds is that the various lenders understand that education is a long-term personal investment with the potential to generate returns. However, student loan payments can be challenging to stay ahead if you don’t do your math.

Every student can have a chance to borrow the needed money for their tuition. Before applying, it is best to have an idea of what your monthly payments will be so that you can eventually proceed to embark on such a serious commitment.

How does the calculator work?

Once you have selected the desired inputs, make sure you hit “Calculate” each time: this is true for every time you make any adjustments, otherwise you’ll see the previous calculations. Clicking on the “Compare” button you’ll see a panel in which to select the parameters of another loan, so as to see the difference with the payments.

The APR (Annual Percentage Rate) is the interest applied to your payments, including the main fees. This calculator assumes that the interest rate stays the same (a fixed rate) during the entire timeframe of the loan.

It is also assumed that the loan will be amortized in equal monthly installments, which is the case of  standard or extended loan repayment.

Regardless if you are getting federal education loans or private student loans, the calculations will be the same, unless you opt for or are given with non-standard repayments schedules, such as those income-based, pay-as-you-earn, and graduated plans.

How student loans work in a nutshell

As for any loan, student loans come with installments that you need to pay every month. The monthly payments are made up of the principal loan amount plus the interest rate applied to that amount. The loan has a pre-set duration (term), and it may require additional fees.

However, if you take a loan for educational purposes, you don’t necessarily need to start repaying it the month after you graduate. In many cases, lenders will allow you to make tiny monthly payments while in school, then start affecting the bulk of your student loans once you’ve completed your degree and raised your income. Moreover, there is a common option to pay only the interest on your student loan while in school. 

Before taking a federal or private student loan, you should first exhaust the funds from grants and scholarships, then borrow just what is needed for the upcoming or current school year: this is both widely recommended by financial experts and common sense.

The Size of Your Loan

How large of a loan you qualify for will depend on several factors, such as whether you’re dealing with a private or public lender. The size of your loan will also be determined by what kind of degree you are pursuing: undergraduate or graduate.

The limits on federal student loans are as follows:

  • Annual Amount (Dependent undergraduate student)

-1st year $5,500

-2nd year $6,500

-3rd year or higher $7,500 (up to a lifetime limit of $31,000)

  • Annual Amount (Independent undergraduate student)

-1st year $9,500

-2nd year $10,500

-3rd year or higher $12,500 (up to a lifetime limit of $57,500)

  • Graduate: $20,500 annually (with a maximum lifetime limit of $138,500, including undergraduate loans)

Further Student Loans Considerations

Creditworthiness: Most private lenders group credit scores into tiers which estimate the likelihood of non-payment. The exact details behind their tiering system are kept secret. Suffice it to say, the higher your tier ranking, the better rate you qualify for. Carrying what’s considered as a “bad credit” gives borrowers the chance to be approved with a higher interest rate, which means their loans will be more costly than if having a good score.

Repayment terms: A shorter loan term has a major advantage—although the payments are higher and tie up your cash—you will likely qualify for a lower rate. And the quicker you repay your debt, the less time the loan has to accumulate interest. On the other hand, with longer-term financing, you won’t have to pay as much toward your student loans each month. Of course, this will likely come with a slightly higher interest rate — but even if it doesn’t, the longer timeframe alone would cost you more in interest over the years.

Fixed and Variable Interest Rates: interest rates on federal loans are fixed and equivalent for every applicants. In contrast, rates on private financing can be either fixed interest rates or variable: in the latter case, they will fluctuate during the loan lifetime according to the market conditions and ratios.

What to look for in a calculator for student loan repayment

-The APR is your interest rate plus most of the fees that lenders may apply to your loan. Federal loans have standard interest rates for all borrowers, regardless of one’s credit score or income. Private lenders, however, will conduct a credit check, and only once your creditworthiness has been established will they make offers with rates and terms.

-The loan term is the timeframe within which you have to repay the loan in full.

Under a standard repayment plan, the term for federal loans is 10 years by default. Their alternative payment plans can offer terms from 10 to 25 years. In contrast, terms for private student loans can be as short as five years and last up to 20 years, depending on the lender.

The comparison function evaluates the different rates and terms of two lending companies, making it quick and easy to choose the one best suited for a realistic and comfortable repayment plan.

– The table with payments breakdown: to assess to convenience of a loan, you should look at how your payments will be spread into principal and interest. In the amortization schedule, you can see how your loan balance decrease over time as you pay interest alongisde with the  principal portion of your loan.

-Accuracy: having used a standardized formula for our student loan repayment calculator, you can rest assured you’re getting a precise estimation for your financing solution.

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