Student loan calculator online in 2022: assessment of the best student loan in the USA
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A student loan is money that the government or private lenders provide to borrowers who will enter college or university. Such loans help students pay for tuition costs, living expenses, books, materials, student health insurance, and other university or college fees. Borrowers always have to pay back their loans along with interest.
Students can choose from federal and private student loans. The government extends federal student loans, while different financial institutions, such as banks, credit unions, and private lending companies, offer private student loans. These two major types of loans also have subtypes.
For example, federal student loans are divided into:
Stafford Loans. It is the federal Direct Loan program. There are direct subsidized and unsubsidized loans.
Direct Subsidized Loans. This type of federal student loans is designed only for undergraduates who face financial hardship. If the students decide to apply for subsidized Stafford loans, they won't be responsible for making payments until their graduation. Usually, these loans are available for students whose families' annual earnings are less than $50,000.
Direct Unsubsidized Loans. This type of federal student loans is available for graduate and undergraduate students who don't even have financial problems. The annual limit for unsubsidized loans borrowers varies from $5,500 to $12,500.
Both subsidized and unsubsidized loans have a lot of pros, such as low-interest rates, flexible repayment options, loan forbearance, etc.
Direct PLUS Loans. This type of federal student loans requires a Free Application for Federal Student Aid (FAFSA) and a credit check. Direct PLUS loans are available for graduate students and parents who want to take out the loans for their dependent students.
Perkins Loans. The Perkins Program was popular until 2017. These loans were more popular than Stafford Loans because of a fixed interest rate (5 %). Also, these loans had a longer grace period (9 months) before borrowers repaid their loans and special provisions of loans write-offs.
Private Student Loans. Private student loans don't have the same advantages as federal loans, but they are also designed to help students pay for their education in college or at university. Their main differences from the federal student loan are higher interest rates and expensiveness. The government doesn't help you if you apply for this loan, and you will be responsible for all interest payments. A future borrower has to research private student loans options and choose the best one. They should pay special attention to the interest rates and repayment terms.
The cost of loans and credit scores to determine borrowers' eligibility are the main differences between federal and private student loans.
If you are an undergraduate student and want to apply for a federal student loan, you don't have to worry about a credit check. But if you are a graduate student, you should know that a credit check is required, and if the results of such a check are unsatisfactory, you probably won't have the right to apply for a loan and obtain it.
Federal student loans require your credit check, and your credit score must be at least 640 points. But you should always pay attention to the terms and conditions of the particular loan because sometimes borrowers need to have higher credit scores to apply for loans.
There are some other differences between federal and private loans. For example, the government always offers federal loans to students with fixed interest rates. At the same time, private lenders provide loans with both variable and fixed interest rates, and usually, these rates are higher.
Unlike some federal loans, private student loans are never subsidized, and it means that the borrowers have to pay all the interest if they obtain financial aid from private lenders. But if you are an undergraduate student who needs financial assistance from the government, you can be sure that the government will pay your interest until you graduate.
If you use federal student loans, you will benefit from flexible repayment options and a loan forgiveness program. Private loans don't provide for a loan forgiveness program, and also they have limited repayment options.
The borrowers don't need to repay federal loans until they graduate, but they have to pay back private loans while studying.
A student loan calculator can help future borrowers determine and choose the best student loan repayment strategy.
When you specify some basic information about your future loan, the student loan calculator will show you the results, such as your monthly payments in the future, the term of your loan, and the interest you will have to pay. This calculator will help you consider different student loans and choose the best one.
If you want to use the student loan calculator, you have to prepare some necessary information about your loan. First, you have to know your loan amount. Federal and private student loans have different loan amounts, and your loan amount usually depends on whether you're a graduate or undergraduate student.
If you choose a federal student loan, consider loan amounts for graduate and undergraduate students. For example, direct subsidized loans for graduate students are up to $20,500 annually. And the amount of direct subsidized loans for undergraduate students is $5,500. The amount of direct unsubsidized loans for an undergraduate student is up to $12,500.
Private student loan amounts are usually variable and depend on the lender. Private lenders set their own repayment terms, interest rates, annual borrowing limits, etc. Some lenders provide loans up to $150,000 and even more, but it depends on the student's degree.
Before you decide to obtain financial aid from private lenders, you should consider details about federal student loan limits.
The following information you need to know to use a student loan calculator is the loan term. The loan term is the number of months the borrowers have to repay their loans. The default loan term of federal student loans under a standard repayment plan is 10 years. But if you choose loans that are under an alternative payment plan, your loan term will vary from 10 to 25 years. The loan terms of private loans are usually set by lenders and vary from 5 to 20 years.
If the students have short loan terms, they will save their money on interest charges during the repayment periods, but their monthly payments will be large. And if the students have the long terms for their loans, their monthly payment will be low. Long terms of student loans will accumulate more interest charges over time. So, the borrowers make sure they know all details about the loan terms, and then they will choose the right way to receive the financial aid.
Also, before using a student loan calculator, you need to learn some information about interest rates. Usually, the interest rates depend on your financial situation and the particular lender. For example, all borrowers who apply for federal student loans will have the same interest rates. Their incomes or credit scores don't matter. But if they request financial assistance from private lenders, they will face credit checks. As a result, their interest rates will be set according to their creditworthiness. Borrowers will have low-interest rates only if their credit scores are high enough.
Students need to take into consideration the fact that the lowest interest rates, which are presented on the lenders' websites, may not be available to them. The borrowers need to use the prequalification features to determine what interest rates they will receive. Prequalification allows them to enter the key information about themselves and the desired loan option. Instead, the borrowers will receive data about offered terms and rates of the loan.
When you calculate your student loan interest, you need to take into consideration the following things:
Fixed vs. variable rates. As it was mentioned above, federal student loans have only fixed interest rates, and private student loans may have both fixed and variable interest rates. Fixed rates don't change during the long term, while variable rates can rise or decline depending on market conditions.
Term length. The borrowers' total interest always depends on how long or short their student loan terms are. Besides calculating borrowers' total interest paid, the student loan calculator displays to them which portion of their monthly payment goes toward interest.
Credit score. Private student loans require credit checks of the borrowers. Credit score has an impact on interest rates. The higher borrower's credit score, the lower their interest rates. If the borrowers shop for bad credit student loans, they will have higher interest rates. It means more money is spent on interest charges.
If you decide to choose the best loan using a student loan payment calculator, you have to pay special attention to your student loan amount, the interest rate, and the term of your loan. After you need to enter this information in the online calculator, push the "Calculate" button, and you will see the information about your monthly student loan payments. Then you can choose the best option.
Yes, student loan affect a borrower's credit score. Their credit report will contain a student loan amount and a history of payments. If a borrower makes monthly loan payments on time, their credit score will be good. But if they miss payment deadlines, student loan will hurt their credit score.
Yes, sometimes student loans affect buying a house. This occurs because student loans have an impact on borrowers' finances in several ways, such as credit score, debt-to-income ratio, and savings potential. All of these are taken into account while buying a house.
After seven years, negative information about student loans may disappear from borrowers' credit reports. But the only way to get rid of the student loans themselves is to repay them.
If you don't make your monthly payments, you will face short-term consequences such as late fees, withheld tax refund, wage garnishment, or loan-term consequences such as default, lost eligibility for future aid, credit score drop, and potential lawsuits.
