{"id":1456,"date":"2021-07-26T16:24:04","date_gmt":"2021-07-26T20:24:04","guid":{"rendered":"https:\/\/www.skypointfcu.com\/wph\/workarea\/?p=1456"},"modified":"2022-03-31T12:48:07","modified_gmt":"2022-03-31T16:48:07","slug":"how-much-youll-really-pay-for-that-student-loan","status":"publish","type":"post","link":"https:\/\/www.skypointfcu.com\/wph\/workarea\/blog\/how-much-youll-really-pay-for-that-student-loan\/","title":{"rendered":"How Much You\u2019ll Really Pay for That Student Loan"},"content":{"rendered":"\n<p>Those who graduate college with student loans owe close to $30,000 on average, according to the most recent data from the Institute for College Access &amp; Success.<\/p>\n\n\n\n<p>But they\u2019ll likely repay thousands more than that because of interest. One key to limiting interest cost is choosing&nbsp;<a href=\"https:\/\/www.nerdwallet.com\/blog\/loans\/student-loans\/student-loan-repayment-plans\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">the right repayment plan<\/a>. The bottom line? Opting for lower payments will cost you more overall.<\/p>\n\n\n\n<p>Using a tool like the&nbsp;<a href=\"https:\/\/studentloans.gov\/myDirectLoan\/repaymentEstimator.action\">Education Department\u2019s Repayment Estimator<\/a>&nbsp;can help you better understand potential costs. Here\u2019s how much $30,000 in unsubsidized federal student loans would cost under different plans at the 2019-2020 undergraduate rate of 4.53%.<\/p>\n\n\n\n<p><strong>Standard repayment<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Total repaid: $37,311<\/li><li>Monthly payment: $311<\/li><li>Repayment term: 120 months<\/li><\/ul>\n\n\n\n<p>The standard plan splits loans into 120 equal payments over 10 years. Federal borrowers automatically start repayment under this plan, unless they choose a different option.<\/p>\n\n\n\n<p>Standard repayment adds more than $7,000 to the loan\u2019s balance in this example, but that\u2019s less than most other options.<\/p>\n\n\n\n<p>Barry Coleman, vice president of counseling and education programs for the National Foundation for Credit Counseling, says to stick with the standard plan if payments aren\u2019t more than 10% to 15% of your monthly income.<\/p>\n\n\n\n<p>\u201cThe monthly payment would be higher, but in the long run [you] would save more in interest charges,\u201d Coleman says.<\/p>\n\n\n\n<p><strong>Graduated repayment<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Total repaid: $39,161<\/li><li>Monthly payment: $175 to $525<\/li><li>Repayment term: 120 months<\/li><\/ul>\n\n\n\n<p>Graduated plans start with low payments that increase every two years to complete repayment in 10 years. Despite having the same repayment term as the standard plan, graduated repayment costs $1,850 more overall due to additional interest costs.<\/p>\n\n\n\n<p>Cathy Mueller, executive director of Mapping Your Future, a nonprofit located in Sugar Land, Texas, that helps college students manage debt, says graduated repayment may be a good option for those who expect their earnings to increase in the future.<\/p>\n\n\n\n<p>However, those doing well careerwise should try to make the standard plan work because of its lower interest costs.<\/p>\n\n\n\n<p>\u201cIt\u2019s not going to be a huge difference, but every penny counts,\u201d she says.<\/p>\n\n\n\n<p><strong>Extended repayment<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Total repaid: $50,027<\/li><li>Monthly payment: $167<\/li><li>Repayment term: 300 months<\/li><\/ul>\n\n\n\n<p>The extended plan stretches repayment to 25 years, with payments either fixed or graduated. Fixed payments add more than $20,000 to the example $30,000 balance; graduated payments would inflate your balance even more.<\/p>\n\n\n\n<p>\u201c[Extended repayment] is not going to be best for a lot of people,\u201d Mueller says. \u201cBut it is an option.\u201d<\/p>\n\n\n\n<p>You must owe more than $30,000 in federal student loans to use extended repayment.<\/p>\n\n\n\n<p><strong>Income-driven repayment<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Total repaid: $37,356<\/li><li>Monthly payment: $261 to $454<\/li><li>Repayment term: 110 months<\/li><\/ul>\n\n\n\n<p>The government offers four&nbsp;<a href=\"https:\/\/www.nerdwallet.com\/blog\/loans\/student-loans\/income-driven-repayment-right\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">income-driven repayment plans<\/a>&nbsp;that base payments on your income and family size.<\/p>\n\n\n\n<p>This example uses the Revised Pay As You Earn plan, a family size of zero and an income of $50,004, based on starting salary estimates from the National Association of Colleges and Employers. It also assumes annual income growth of 5%.<\/p>\n\n\n\n<p>Income-driven repayment costs about the same as standard repayment under these circumstances. But these plans are typically a safeguard for borrowers who can\u2019t afford their loans, as payments can be as small as $0 and balances are forgiven after 20 or 25 years of payments.<\/p>\n\n\n\n<p>Lindsay Ahlman, senior policy analyst for the Institute of College Access &amp; Success, says to think long-term before choosing an income-driven plan,&nbsp;and know you can always switch to income-driven repayment if you hit a rough patch.<\/p>\n\n\n\n<p>\u201cA lot of things are going to happen over the course of repayment \u2014 your earnings trajectory, your life decisions like marriage and children \u2014 that affect your income-driven payment,\u201d Ahlman says. And while an income-driven plan can reduce monthly payments, you may pay more overall because the repayment period is longer than the standard plan, she says.<\/p>\n\n\n\n<p><strong>Ways to save<\/strong><\/p>\n\n\n\n<p>Even the least expensive repayment plan could add $7,000 to your loans. If you just graduated and want to&nbsp;<a href=\"https:\/\/www.nerdwallet.com\/article\/loans\/student-loans\/pay-off-student-loans-fast?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">shave down that amount<\/a>, you have options.<\/p>\n\n\n\n<p>Coleman suggests making payments during the six-month grace period and paying off interest before it\u2019s added to your balance when loans enter repayment, if possible.<\/p>\n\n\n\n<p>Other ways to cut costs include letting your servicer automatically deduct payments from your bank account, which can reduce your interest rate, and paying loans twice a month instead of once. You can always prepay student loans without penalty.<\/p>\n\n\n\n<p><em>This article was written by NerdWallet and was originally published by The Associated Press.<\/em><\/p>\n\n\n\n<p><strong>More From NerdWallet<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.nerdwallet.com\/blog\/loans\/student-loans\/student-loan-repayment-plans\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">Student Loan Repayment Options: Find the Best Plan<\/a><\/li><li><a href=\"https:\/\/www.nerdwallet.com\/blog\/loans\/student-loans\/income-driven-repayment-right\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">Income-Driven Repayment: Is It Right for You?<\/a><\/li><li><a href=\"https:\/\/www.nerdwallet.com\/article\/loans\/student-loans\/pay-off-student-loans-fast?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=jsaenzmcefcu-org&amp;utm_content=646322\">How to Pay Off Student Loans Fast<\/a><\/li><\/ul>\n\n\n\n<p>Ryan Lane is a writer at NerdWallet. Email: rlane@nerdwallet.com.<\/p>\n\n\n\n<p>The article How Much You\u2019ll Really Pay for That Student Loan originally appeared on NerdWallet.<\/p>\n","protected":false},"excerpt":{"rendered":"Those who graduate college with student loans owe close to $30,000 on average, according to the most recent data from the Institute for College Access &amp; Success. But they\u2019ll likely repay thousands more than that because of interest. One key to limiting interest cost is choosing&nbsp;the right repayment plan. The bottom line? Opting for lower [&hellip;]","protected":false},"author":6,"featured_media":1940,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","attr_excerpt":["Those who graduate college with student loans owe close to $30,000 on average, but they\u2019ll likely repay thousands more than that because of interest. One key to limiting interest cost is choosing the right repayment plan. The bottom line? Opting for lower payments will cost you more overall."],"footnotes":""},"categories":[3,6],"tags":[29,31],"class_list":["post-1456","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance","category-quick-tips","tag-personal","tag-student"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Much You\u2019ll Really Pay for That Student Loan - SkyPoint Federal Credit Union<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Much You\u2019ll Really Pay for That Student Loan - SkyPoint Federal Credit Union\" \/>\n<meta property=\"og:description\" content=\"Those who graduate college with student loans owe close to $30,000 on average, according to the most recent data from the Institute for College Access &amp; Success. 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