When you’re considering taking out a new student loan, or about to start paying off a current loan, you need a student loan calculator to determine and know what your monthly repayment is. A student loan repayment calculator helps you automatically calculate how much money you owe for student loans each month and overall. This article will cover how you can use the student loan repayment calculator. But first, what is loan repayment term?
What is loan repayment term?
Table of Contents
Loan repayment term is the number of years or months you have to repay your loan. Federal loans typically have a ten-year repayment period. The repayment time for private student loans might range from 5 to 20 years, depending on the loan. When you apply for a loan, you’ll be given a specific term.
READ MORE: Student Travel Insurance: All You Should Know
Student loan repayment calculator: 4 steps to calculate student loan repayment term
It is essential to understand how student loans work and what your monthly payments will be after graduation. Most student loan payment calculators allow you to see what your student loan payments will be depending on your loan amount, interest rate, and loan term. Follow these steps to calculate your student loan repayment
- Step 1: Create an account or log in to an existing account and go to the loan details page.
- Step 2: Find your Current Balance, Interest Rate, and repayment term.
- Step 3: Input your Current Balance in the loan amount field, your Interest Rate, and repayment term in the remaining fields.
- Step 4: Convert your repayment term from months to years or how you intend to repay the loan. However, If you’re using student loan payment amount estimators for multiple loans, calculate each loan separately and add up the payment estimates.
How are student loan payments calculated?
Student loan installments, like other loan payments, are determined by the specifics of your loan. This covers the length of time you intend to repay the loan, the interest rate you received, and the total amount borrowed. The greater your interest rate and debt, the greater your monthly payment. Also, the shorter the payback time, the greater the monthly payment, and vice versa. In the first several years of a student loan repayment term, you pay more toward interest accrued than the principal balance. However, as you continue to make the same monthly payment, your principal balance starts to decrease faster.
Student loan repayment calculator: Interest rates for federal versus private student loans
The average interest rate for federal student loans and private student loans differs. Federal student loans have a single, fixed interest rate, which means that the interest rate on your loan will not alter over time. However, private student loans come with a variety of interest rates. Private student loans are based on credit. Your creditworthiness and the creditworthiness of your cosigner (if you have one)along with some other considerations are important. This is because they will determine the rate offered to you. When you apply for a loan, you’ll be given an interest rate, either fixed or variable, based on what’s available and the sort of rate you choose.
READ MORE: Avanti Travel Insurance: Reviews And Benefits
Which is better? Federal loan or Private loan?
Students who haven’t borrowed for their education but plan to do so should consider a federal student loan. Federal student loans offer the best option for those who have no credit history. These loans have added protections such as income-driven repayment plans and forbearance options. They even provide forgiveness opportunities for those that meet select eligibility requirements. Millions of borrowers who already have student loan debt can switch to private lenders. You should consider refinancing your federal or private student loans with a private lender to achieve a reduced interest rate on your debt. This paints a brighter picture of your total student loan payments and reduces your monthly responsibility. Refinancing federal student loans to private loans, however, eliminates all federal protections such as income-driven repayment plans and forgiveness chances.
READ MORE: Why Do I Need Travel Insurance?
Final thoughts
Student loan payments vary from borrower to borrower, but managing student loan debt is doable. If you are yet to borrow or already repaying your loans, be sure you understand what your monthly student loan payment will be. Your total loan balance, interest rate, and repayment duration determine your monthly repayment. All you have to do is to get a student loan calculator to calculate your repayment plan to avoid mistakes and manage your loans.
