Student Loan Calculator

FAFSA First: Have You Applied?

Before using our student loan calculator, we highly recommend completing the Free Application for Federal Student Aid (FAFSA). Even if a student doesn’t qualify for federal grants or scholarships, the FAFSA is also used for financial aid from colleges and universities, scholarships, and state grants. By skipping the FAFSA, students and their families can miss out on free money.

We suggest students have their federal loan letter and any financial aid packages in hand before using the calculator to ensure they get a more accurate portrait of their future finances.

Different Loans for Different Folks

There isn’t only one type of student loan – they tend, however, to come in federal or private loans.

Federal Loans

Federal loans are offered through the United States Department of Education. There are three types of federal student loans – Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans.

• Direct Subsidized loans. These are available for students who have demonstrated financial need. The loans will not accumulate interest until after the individual has either been out of college or graduated for 6 months.
• Direct Unsubsidized loans. Unsubsidized loans are available to all students, regardless of financial need. Interest accrues immediately on these loans, but payments can be deferred until 6 months after graduation.
• Direct PLUS Loans. These federal student loans are for graduate and professional students as well as parents of dependent undergraduate students and there is no borrowing limit.

Benefits of Federal Loans:

• They tend to have a lower fixed interest rate compared to private loans
• There are several repayment, deferment, forbearance, loan forgiveness, and borrower protection programs available including income-driven repayment
• Payments are not due until 6 months after the individual has left college or graduated.
• No credit history is needed
• It takes longer to default if the individual is having difficulty paying

Downsides of Federal Loans:

• Some are based on demonstrated financial need only and may not meet the student’s actual need.
• Students can only take out so much in federal loans.
• Except in extenuating circumstances, the parents or guardians have to complete the FAFSA with the student – if the parents or guardians refuse, the student will not be eligible for federal loans.

Private Student Loans

Private student loans are granted through banks, credit unions, and other lending agencies. These have varying amounts and interest rates depending on different factors including the individual’s credit history, credit score, income, and co-signer.

Benefits of Private Student Loans:

• They can be used to fill the financial aid gap after all other options have been exhausted.
• Students could potentially be able to borrow up to 100% of their cost of school thanks to higher borrowing limits.
• They can help to boost credit score.
• There is a statute of limitations if the individual defaults on their loan (3 to 10 years depending on the state).
• They can be available to international students.

Downsides of Private Loans:

• There are fewer borrower protection programs, repayment plans, and deferment solutions if any.
• They tend to have higher interest rates compared to federal student loans and rates can be variable.
• A co-signer may be required.

Student Loan Amortization

Student loan amortization refers to the idea of paying down a debt in monthly (or bi-weekly) installments. Payments include both principal and interest payments, and students can get ahead of their debt by making extra payments or refinancing if it makes financial sense to do so.

Since student loans are amortized, it means the individual, when they make a payment, is paying down the loan principal amount and the interest. As time goes on and the remaining amount of the loan becomes smaller, more money is being paid towards the principal amount and less towards interest.

Students, therefore, can save more money in the long run by paying more into their debt when they can afford it each month.

College Affordability

College affordability is another factor that should be considered when it comes to calculating just how much a student will owe after graduation. Different colleges and universities have varying amounts of institutional grant aid available for its students, meaning one college could be more affordable for a student than another.

Some factors that play into college affordability include:

• Merit or academic achievements
• Demonstrated financial need
• Location and state
• Private vs public schools
• Available institutional grant aid