Student Loan Repayment and Consolidation Calculators, How they Help
Student Loan Repayment and Consolidation Calculators
By definition, a Student Loan is a type of a loan specifically made to help students pay for their post-secondary education and the various fees associated with it like Books, Tutions, Hostel, and other living expenses. They usually differ from the other types of loans due to the fact that student loans mostly have a lower interest rate and the loan repayment time may be deferred until the student finishes school. You can check out more details about student loan repayment calculator on here.
But in reality, even with the low-interest rates and deferred payments, a majority of the students find it hard to repay these loans due to various reasons such as finding jobs that pay enough to repay the loan and because of this America is facing a staggering $1.6 Trillion Student Loan Debt.
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Can Something be Done About It?
While there is no way to waive the loan, there are a few ways to make sure the pressure of repaying the loan decreases and also helps you reduce the interest on your loans and helps you attain financial freedom.
How can a Student Loan Repayment and a Consolidation Calculator be of Help
The loan repayment calculator does more than just show the duration required to pay off the loans, as paying off student loans incorporates more than just sticking to a monthly financial plan.
When creating a repayment plan it is necessary to take some smart steps and strategize accordingly, it can all be simplified by following
- Collect the basic information that is needed to calculate. Interest Rates, the Loan amount of public or private loans and the amount you are willing to pay on a monthly basis is the information required to do so.
- Fill the details in their respective places
- Click on Calculate, and the result produced will be the duration required to pay off the loan which can be in months or years. It also shows the total interest that you would’ve paid by the end of the loan term.
For example, let us assume you took a student loan of $40,000 with an annual interest rate of 5% for which you make a monthly payment of $500 and by the end of the loan term the total amount if the interest sums up to $8757.11 and the total time required for it is 98 months or close to 8 years and a month, but if you were to make an additional payment of $100 a month given your financial situation allows it, then your monthly payments would be $600 and you would be paying $6,958.73 as your total interest and if you were to do this then the total time required to pay off the debt would be 78 months or 6 and a half years.
As it can be seen, the differences in the amount paid and the duration required are significantly lower than what it was if you were to do only minimum monthly payments, the total interest amount was reduced by nearly $1,700 and the duration required to repay was reduced by almost a year and a half which ultimately brings you closer to financial freedom. So in simple terms, if you increase your monthly payments then your interest amount will reduce significantly and the duration required too.
Of course, this was an example but in reality, you have to calculate your financial situation and then make repayment plans and an important thing to remember is not to push too hard when it comes to paying extra, only pay if you can afford to.
What more can be done?
There a few more ways to get closer to financial freedom:
- Automating the payments of loans: Students can get discounted interest rates if they authorize the bank to automatically deduct money for student loan repayments, a lot of lenders offer this service and discounted interest rates for individuals who avail it. It helps reduce the expenses on student loan repayments.
- Refinancing your loans: It is a concept of replacing your current loan with another loan which is less costly and with a reduced interest rate.
What is a Student Loan Consolidation Calculator?
If an individual ever happened to take more than one private loan or a federal loan then you can group them all under one loan, Student loan consolidation means grouping multiple student loans under just one student loan, this helps them make only one payment as opposed to making several payments. You can use a student loan payoff calculator to estimate when you will be able to pay off your student loan in full. A student loan consolidation calculator can help you do the same.
Once the loans are consolidated it is important to remember that one’s credit score isn’t affected adversely in fact if you have a good history, it can improve your score.
To start off, information on all the student loans taken must be provided in the respective spaces. LIke, Interest Rate on each loan, Loan Balances on all our student loans, type of loan(private or federal) and your current monthly payment for each loan and hit calculate, your results will be ready in no time.
Pros and Cons of a Student Loan Consolidation Calculator
Like any other thing, even a student loan consolidation calculator has its pros and cons
- It gives you more time to pay your loans off.
- The management of finances becomes much easier.
- Freedom of choice when choosing your lender
It does not show you the target debt for each payment.
- You give up federal loan benefits
- After consolidation, in some cases, you could end up paying more on interest
- Since you pay more in interest, this will reduce the savings you can accrue from your income.
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