Want to pay off student loans faster?
Here’s what you need to know.
The Covid-19 pandemic hasn’t made it any easier to pay off student loans. According to the latest student loan debt statistics, there are 45 million student loan borrowers who collectively owe $1.7 trillion in student loan debt. While some borrowers are hoping that their student loans will be cancelled, there is no guarantee that student loan forgiveness will happen anytime soon. Despite this uncertainty, there are proactive ways for you to take control of your student loan debt. Here are 4 student loan calculators that can help you pay off student loans faster and save money.
1. Student Loan Refinancing Calculator
This student loan refinancing calculator shows you how much money you can save when you refinance student loans. Student loan refinancing helps you combine your existing federal student loans, private student loans or both into a new student loan with a lower interest rate. With student loan refinancing, you can choose a fixed or variable interest rate as well as a student loan repayment term between 5 and 20 years. To qualify for student loan refinancing, you’ll need a credit score of at least 650, be currently employed, recurring monthly income, enough monthly cash flow to pay your living cxpenses and student loan debt, and a history of financial responsibility.
Why This Calculator: This student loan refinancing calculator help you learn how much money you can save by refinancing. While federal student loans are currently paused, your regular interest will resume once temporary forbearance ends. With historic low interest rates, now is a smart time to get a lower interest rate on all your student loans. Alternatively, you could refinance private student loans now, since private student loan payments are not paused.
Example: Let’s assume you have $90,000 of student loan debt, an 8% average interest rate, and 10 years remaining on your loan term. With student loan refinancing, let’s assume you qualify for a 3% interest rate and choose a 10-year loan term.
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Result: With student loan refinancing, you can lower your monthly payment by $223 per month and save $26,748.
2. Student Loan Pay Off Calculator
This student loan pay off calculator shows you how much time and money you can save by making extra monthly student loan payments. Should you make extra student loan payments now? That may sound counterintuitive during the Covid-19 pandemic when many borrowers are struggling to make one payment and federal student loan payments are temporarily paused. That said, here are two ways to save money. First, make an extra student loan payments each month. Second, you can choose a pay off date, and this calculator what your student loan payment would have to be to meet this target date. For simplicity, this calculator assumes the federal student loan forbearance has ended. If you use this calculator while the temporary forbearance is active, your savings will be even higher because your federal student loan payments, which are optional, will directly pay off your principal balance first.
Why This Calculator: This student loan pay off calculator shows you how making an extra student loan payment or higher student loan payment can save you money on your student loans.
Example: Let’s assume you have $80,000 of student loans, a 7% average interest rate, and a $929 per month student loan payment. Now, let’s assume you pay an extra $100 per month on your student loan, for a total of $1,020 per month.
Extra Payment: With only a $100 per month extra payment on your student loans, you would save $4,561 and pay off your student loans 1.33 years earlier.
Remaining Term: If your goal is to pay off your student loans in 7 years (rather than 10 years), you would need to pay $290 extra per month, and you would save $9,091 in interest.
3. Public Service Loan Forgiveness Calculator
This public service loan forgiveness calculator helps you maximize your student loan forgiveness by choosing the best income-driven repayment plan for your federal student loans based on your financial situation. There are four major income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). With income-driven repayment plans, your monthly student loan payment is 10-20% of your discretionary income. To participate in the Public Service Loan Forgiveness program. you must work full-time for a qualified public service or non-profit employer, make 120 monthly payments and meet other requirements. President-elect Joe Biden wants Congress to cancel student loans immediately. However, he also has a plan to simplify income-driven repayment, which are helpful for borrowers who are struggling to repay student loans. This calculator assumes that federal student loan forbearance is no longer active, so your savings may be even higher.
Why This Calculator: This calculator helps you save money by choosing the best income-driven repayment plan to get the most student loan forgiveness.
Example: Let’s assume you have $70,000 of federal student loans at a 6% interest rate and 10-year repayment term. You also earn $50,000 a year, live in California and are single with no children.
Result: The optimal income-driven repayment plan for you is PAYE, which can help you get $74,891 of student loan forgiveness.
4. Extra Student Loan Payment Calculator
If you want to make a one-time, lump sum payment on your student loans, this extra student loan payment calculator is the best student loan calculator. When should you use calculator? If you recently got a bonus, inheritance or tax refund, for example, or want to use your savings to pay off student loans early, then this calculator helps save you money.
Example: Let’s assume you have $60,000 of student loan debt, a 6% average interest rate, and a $666 per month student loan payment.
Here’s how much money and time you can save when you make a lump-sum payment on your student loans:
$500 Lump Sum Payment: You would save $352 and pay off your student loans two months earlier.
$1,000 Lump Sum Payment: You would save $699 and pay off your student loans three months earlier.
$5,000 Lump Sum Payment: You would save $3,286 and pay off your student loans 13 months earlier.
$10,000 Lump Sum Payment: You would save $6,088 and pay off your student loans 25 months earlier.