You walk into your college’s financial aid office and fill out paperwork to borrow $14,000 at a 6% interest rate that you promise to repay over 10 years. The financial aid officer who helps you fill out the paperwork calculates that when you start to repay, you will write a monthly check for $155.40. You leave the financial aid office feeling pretty good. You can handle that monthly payment easily, so why worry?
Maybe you shouldn’t feel so great, because you just signed up to pay $4,651.60 in interest on that loan. That’s another way of saying that you borrowed $14,000, but will need to pay back a total of $18,651.60. Bet you’re not feeling so good now.
New StraighterLine Video Helps You Calculate the Real Cost of Borrowing
How can you calculate the figures we quote above – the real cost of borrowing $14,000 for 10 years at 6%?
One easy way is to watch a new video, “Student Loan Calculation,” that StraighterLine Math Professor Dan Gryboski just posted on YouTube. This video makes it a snap to calculate the real cost of any loan that you are about to take. Simply follow along with the instructions in the video, plug in the terms of your loan (the amount borrowed, the length of the repayment period, and the interest rate) and you’ll get all the data you need to make a smart decision about how much that loan will really cost you.
The bottom line is, don’t borrow blind. Thanks to Prof. Dan Gryboski, you can now make a smarter choice.
How Do You Know if You Can Afford Your College Degree?
Student Debt Success Stories
How to Avoid Borrowing too Much to Pay for College
Best Way to Cut College Costs: Borrow Just a Little, Save a Lot
Why Adult Learners Should File the FAFSA