Loan Calculator Grace Periods

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Loan Calculator Grace Periods Powered By Docstoc
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Think Before You Borrow
Money Saving Tips
It's easy to rush through the loan process. But if you take a minute and consider the following points, you could save yourse lf some money in
the long run.

Avoid Falling into the "Loan Trap"
Because need-based loans are easy to apply for and don't require payments while you're in school, it's tempting to borrow up to the
maximum amount -- even if it is more than you can afford to repay.

How Much Loan Do You Actually Need
You don't have to borrow the entire amount shown in your award letter.

Consider Options That Will Reduce Your Loan
Can you hold down expenses? Can you work more, either in the academic year or during vacations? Are there scholarships for you? If you
reduce spending or bring in more money, the amount you have to borrow goes down.

Go for the Loan with the Best Terms
The lower the interest rate, the less expensive the loan -- in other words, the less you'll have to repay.

Starting with least expensive, your loan "batting order" should be:
Student Loans

                                    1.   Federal Perkins Loans

                                    2.   Federal Subsidized Stafford or Direct Loans
                                    3.   Federal Unsubsidized Stafford or Direct Loans

                                              Students who don't demonstrate need, or need to borrow more than the subsidized loan
                                              amount, can borrow unsubsidized Stafford loans. Unlike subsidized loans, you are
                                              responsible for paying interest on the loan while in school. The College Board offers
                                              unsubsidized federal Stafford loans through its Education Loan Program.
                                    4.   Alternative Loans

Some students may have access to a special loan source (like the Air Force Aid Society) with terms comparable to Perkins or subsidized
Stafford/Direct loans. It may be worth your time to look into the possibilities. The College Board's online Scholarship Search includes low-
interest student loan programs.
Parent Loans

                                    1.   Federal PLUS Loans

                                    2.   Private Loans (also called alternative loans)

Some colleges offer their own parent loan programs. We recommend that you check with the financial aid office to see if the school offers its
own loan program, and if you qualify, before you submit a PLUS loan application.



How Much Should You Borrow?
Experts Agree -- Only as Much as Necessary
It's tempting to borrow whatever you're offered or are eligible to borrow. But it's important to think carefully about how much you really
need, and to consider other options.

How Much Loan Do You Really Need?
You don't have to borrow the entire amount shown in your award letter. Even more important, don't plan to borrow as much as you can up to
the yearly limits.

Consider Options That Will Reduce Your Loan
If you reduce spending or bring in more money, the amount you have to borrow goes down.

                                  Do you have savings you can use?
                                  Can you get by with less by holding down expenses?
                                  Can you work more, either in the academic year or during vacations?
                                  Are there scholarships that you can apply for?
Estimate Your Loan Payments
The more you borrow, the higher your monthly repayments will be once you graduate. Use our Student Loan Repayment Calculator to do the
math. You can also calculate monthly payments based on the estimate d starting salary of your chosen occupation.
Student Loan Calculator   http://apps.collegeboard.com/fincalc/sla.jsp

                      Imagine you've just graduated from college. Do you know how much your monthly loan payment will be?
                      This calculator will help you understand your student loan repayments in relation to your possible starting
                      salary. Enter the amount(s) you have borrowed or expect to borrow for college, graduate, or professional
                      school in the form below. Then, enter the amount you expect to earn when you graduate. Submit the form
                      electronically to get an analysis of whether the amount you have borrowed or expect to borrow is
                      manageable or potentially burdensome.

                      Do not use commas when entering dollar amounts (e.g. 2000 — not 2,000)

                      Future Plans
                          2003
                                I n what year do you expect to graduate from undergraduate or graduate/professional sc hool (e.g. 2003 )? You
                      may enter a value other than the one s hown.

                           20000
                      $            E nter your es timated annual s tarting salary after graduation. You may enter a value other than the one shown.

                      Subsidized Federal Stafford (or Federal Direct) Student Loan Program
                      E nter s tudent loan amount(s ) you have borrowed or exp ect to borrow.

                      Subsidized Stafford Loans for Undergraduate School

                      $            for 1s t c ollege year (maximum allowed for dependent s tudents = $2 ,625* )


                      $            for 2 nd c ollege year (maximum allowed for de pendent s tudents = $3 ,500* )


                      $            for 3 rd c ollege year (maximum allowed for dependent s tudents = $5 ,500* )


                      $            for 4 th c ollege year (maximum allowed for dependent s tudents = $5 ,500* )


                      $            for 5 th (undergraduate) c ollege year (maximum allowed for dependent s tudents = $5 ,500* )

                      * M aximum total s ubs idized Stafford Loan for dependent s tudents for all undergraduate years is $23 ,000 .

                      Subsidized Stafford Loans for Graduate/Professional School

                      $            for 1s t year of graduate or professional sc hool (maximum allowed = $8 ,500 per year** )


                      $            for 2 nd year of graduate or professional sc hool (maximum allowed = $8 ,500* * )


                      $            for 3 rd year of graduate or professional sc hool (maximum allowed = $8 ,500** )


                      $            for 4 th year of graduate or professional sc hool (maximum allowed = $8 ,500** )


                      $            for 5 th year of graduate or professional sc hool (maximum allowed = $8 ,500** )

                      ** M aximum total s ubs idized Stafford Loan for all graduate/professional sc hool years is $65 ,000 . T his graduate debt limit
                      inc ludes any Stafford loans rec eived for unde rgraduate study.

                      Perkins Student Loan Program
                      E nter s tudent loan amount(s ) you have borrowed or expect to borrow.

                      Perkins Loans for Undergraduate School

                      $            for 1s t c ollege year (maximum allowed = $4 ,000* )


                      $            for 2 nd c ollege year (maximum allowed = $4 ,000* )


                      $            for 3 rd c ollege year (maximum allowed = $4 ,000* )


                      $            for 4 th c ollege year (maximum allowed = $4 ,000* )


                      $            for 5 th (undergraduate) c ollege year (maximum allowed = $4 ,000* )

                      * M aximum total for all undergraduate years is $20 ,000

                      Perkins Loans for Graduate/Professional School

                      $            for 1s t year of graduate or professional sc hool (maximum allowed = $6 ,000 per year** )


                      $            for 2 nd year of graduate or professional sc hool (maximum allowed = $6 ,000** )
                       $           for 3 rd year of graduate or professional sc hool (maximum allowed = $6 ,000** )


                       $           for 4 th year of graduate or professional sc hool (maximum allowed = $6 ,000** )


                       $           for 5 th year of graduate or professional sc hool (maximum allowed = $6 ,000** )

                       ** M aximum total for all undergraduate and graduate/profess ional school years c ombined is $40 ,000 .

                       Other Loans
                       E nter other loan amount(s ) you have borrowed or expec t to borrow.

                       Other Loans for Undergraduate School

                       $           for 1s t c ollege year


                       $           for 2 nd c ollege year


                       $           for 3 rd c ollege year


                       $           for 4 th c ollege year


                       $           for 5 th (undergraduate) c olle ge year

                       Other Loans for Graduate/Professional School

                       $           for 1s t year of graduate or professional sc hool


                       $           for 2 nd year of graduate or professional sc hool


                       $           for 3 rd year of graduate or professional sc hool


                       $           for 4 th year of graduate or professional sc hool


                       $           for 5 th year of graduate or professional sc hool

                       Annual Interest Rate for Other Loans
                           3.42
                                  % A nnual interes t rate for your O ther E duc ational L oans . You may enter a value other than the one s hown.


                       Clear


Student Loan Calculator
Results

Borrowing and Repayment Summary
                       This analysis assumes you qualify for a subsidized Federal Stafford Loan and would not be required to pay
                       interest on your loans while in school. The analysis assumes an annual interest rate of 3.42 percent, and
                       that you will repay your loan over a 10-year period following graduation in 120 equal monthly installments.
                       For purposes of this analysis, dependent student loan limits were used.
                       Subsidized Federal Stafford Loan $ 0Principal you have borrowed or expect to borrow
                       Borrowing Summary
                                                           Total interest to be repaid (interest accrued during in-school and
                                                        $0
                                                           grace periods is paid by the federal government)

                                                                    $ 0Total amount of principal and interest to be repaid
                                                                      Monthly repayment (if less than $ 50, a minimum monthly
                                                                    $0
                                                                      payment of $ 50 would be required).

                       This analysis assumes you qualify for a Perkins loan on the basis of demonstrated financial need. Interest
                       payments would be deferred while you are in college, graduate or professional school.The analysis assumes
                       an annual interest rate of 5.0 percent, and that you will repay your loan over a 10 year period following
                       graduation in 120 equal monthly installments.

                       Perkins Loan Borrowing Summary$ 0Principal you have borrowed or expect to borrow
                                                                     $ 0Total interest to be repaid

                                                                     $ 0Total amount of principal and interest to be repaid
                                                                         $ 0Monthly repayment

                                  This analysis assumes that you qualify for other loans for which interest payments are deferred while you
                                  are in college, graduate or professional school. The analysis assumes an annual interest rate of 3.42
                                  percent, and that you will repay your loan over a 10 year period following graduation in 120 equal monthly
                                  installments.
                                  Other Loan Borrowing Summary$ 0Principal you have borrowed or expect to borrow

                                                                       $ 0Total interest to be repaid

                                                                       $ 0Total amount of principal and interest to be repaid
                                                                       $ 0Monthly repayment

                                  This analysis combines your Stafford, Perkins, and Other Loans into a consolidated summary, based on the
                                  above information.

                                  Consolidated Borrowing Summary$ 0Grand total principal you have borrowed or expect to borrow

                                                                         $ 0Total interest to be repaid
                                                                         $ 0Total amount of principal and interest to be repaid

                                                                         $ 0Combined monthly repayment

                                  Are Your Projected Student Loan Payments "Manageable"?
                                  Is your projected monthly payment of $ 0 manageable in relation to your estimated starting salary of $
                                  20000 when you graduate from college? There is no single, easy answer to this question, but some advisers
                                  suggest that your monthly student loan repayments should not exceed 10-15 percent of your first year
                                  starting income. If student loan repayments exceed 15 percent of your starting income, they could be
                                  burdensome and you may experience difficulty meeting your student loan repayments and other expenses.
                                  You estimated that your starting income could be approximately: $20000 per year, or $ 1667 per month in
                                  today's dollars. You also indicated that you expect to receive your degree in 2003, in about -2 years.
                                  Assuming starting incomes increase by 3 percent per year between now and 2003, we estimate your
                                  starting income could be approximately $1571 per month. Based on this information, your estimated
                                  montly student loan repayments — $ 0 — would represent about 0 percent of your projected monthly
                                  income —$ 1571.

                                  Use the Back button on your browser to return to the input screen if you want to change your information
                                  and rerun an analysis.



Loan Repayment & Debt
Know Your Options
Unlike grants or work-study aid, loans remain a part of your life long after college graduation. It's important for you to give some serious
thought to how much debt you're willing to shoulder and to map out a plan to repay loans as quickly and easily as possible.

Understand Your Debt Limit
How much debt is too much debt? Experts suggest...


                                  Students: Some advisers suggest that monthly student loan repayments should not exceed 10 to 15
                                     percent of a new grad's starting monthly income.

                                     Use the Student Loan Calculator to estimate how much college and graduate/professional school debt
                                     you can reasonably manage in relation to your likely starting salary.

                                  Parents: Some lenders advise parents to limit total debt repayments (including education loan
                                     repayments) to 37 percent of gross income.

                                     Use the Parent Debt Calculator to estimate your parents' capacity to take on new debt.

Good News
Lowered interest rates and favorable tax laws have made borrowing and repaying education loans easier than ever.


                                  Education loan interest rates are the lowest they've been in years. From July 1, 2004 through June 30,
                                     2005, the interest rate for a Stafford Loan is 3.37 percent (for repayment) and the rate for a Perkins
                                     Loan is 5 percent. PLUS loans for parents come in at 4.17 percent.

                                  Students can deduct up to $2,500 per year of education loan interest payments for the life of the loan.
                                     Parents who take out loans to pay for their child's education expenses can claim the same deduction.
                                     Some limitations apply. Consult IRS form 970 for details.

Loan Repayment Options
Most lenders will allow borrowers to adjust repayment terms to suit individual needs and circumstances. Always factor in the total cost of the
loan when considering a change to your repayment plan.

Standard Repayment
Most students repay their loans using a standard repayment plan. Standard repayment involves making equal monthly payments ov er a ten-
year period.

For example, if a typical undergraduate borrows the maximum allowable subsidized Stafford Loan for four years (at the current interest rate)
her total debt, including interest, would be $20,684. Under a standard repayment plan, the student would need to make monthly payments of
$174 for 10 years to repay the loan.
Other Repayment Options
The Federal Direct Loan program and numerous private lenders also offer the following flexible repayment options:


                                              Extended repayment: Depending on the total amount of debt and which lender is involved, the borrower
                                                   can extend the repayment period to upwards of 30 years.

                                              Graduated repayment: Under this plan payments gradually increase, usually every two years.
                                                   Remember that your income will likely be increasing over time, too.

                                              Income-contingent repayment: This plan ties the repayment amount to income and often allows for a
                                                   longer repayment period.
Be careful to balance long-term cost of these repayment plans against short-term payment relief. Although you will be paying less per month,
you could end up owing (and paying) significantly more in the long run because you're slowing down your repayment of the principal.

Note: You should be able to switch back to a standard repayment option at any time. Once you are able, you should also consid er increasing
your monthly payments.

Repayment Tips
Don't forget to:


                                              Account for fees when you are considering education loans. Up to 4 percent of the total amount of a loan
                                                   may be eaten up by up-front fees (3 percent to the lender, 1 percent to the guarantor).

                                              Visit the aid office when you feel you are taking on more than you can afford. The financial aid staff will be
                                                   able to advise you about reducing your level of borrowing and managing your current debt.

Loan Lingo
Here are some repayment terms you should know:


                                              Loan consolidation: Loan consolidation means combining outstanding loans into a single loan with one
                                                   monthly payment. You will have more time to pay off debt, but in all likelihood, the total cost will be
                                                   higher.

                                              Deferment: This is a period during which payments are not required on a loan. For example, you can
                                                   receive a deferment while enrolled in graduate school, serving in the military, or involved in the Peace
                                                   Corps or other public service programs.

                                              Forbearance: This provision allows you to temporarily stop loan payments because of financial hardship.
                                              Cancellation: Some programs allow borrowers to "work off" loans by teaching in low-income areas or
                                                   areas with teacher shortages.

Repaying a PLUS Loan
PLUS loans are popular, non-need-based loans offered to parents of dependent students by the federal government. Parents who qualify for
PLUS loans are able to borrow up to the full cost of education, minus any financial aid.
PLUS loan repayment begins 60 days after the school receives loan funds. Your parents can choose to make full payments or int erest-only
payments while you're in school. The typical repayment term is ten years, but can be extended.

If your parents are thinking of taking out a parent loan, such as PLUS, to pay for your education, they can use our Parent Loan Repayment
Calculator to estimate their monthly payments based on repayment period, annual interest rate, and loan principal amounts.




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