STUDENT LOAN SCENARIO – how can $4,000 actually increase your wealth by $18,299.32?

How many student loans do you own? Blindly paying monthly payments without understanding what is really going on behind the scenes with each of your loans can create devastating unmanageable increasing debt load. Let me help you understand what is going on with your debts and come up with a plan so there will be a light at the end of the tunnel. If you are ready to go to work, we are ready to help you save. call us if you have a burning desire to get out of debt.

Focusing on just one loan:

3rd Sallie Mae loan for $12,178.42 being charged a 9% interest rate and student being told $88.60 is her required monthly payment.

As can be seen on the table below, over the first year the amount of principal is increasing due to the fact that the $88.60 is not covering all the interest being charged, so it is added as principal owing each month. This student has an increasing debt by paying the required loan repayment amount and that is happening with most of her student loans.

The calculator below could not depict a neg. am. scenario so it added a principal only payment at the beginning of year 2 so the loan would actually pay itself off over 30 years.

As seen below, the chart is showing an increasing balance due to not enough money to cover interest rate each month, even though they are the payments suggested by the lender. How many students are trusting their lenders to make sure they are reducing their debt rather than not even covering their interest payments?

The student should have been told her minimum payment to make sure that single loan of $12,178.00 does paid off over 30 years is $97.99. But look at the amount of interest paid; nearly double the principal, If she does pay the minimum over 30 years.

And pay off year is 2045

Notice month 2 of amortization schedule that shows the $4,000 extra one time payment has the division of principal and interest portions of payment equal to Feb 2034.

How do we knock 19 years AND $18,299.32 of interest payments, yes, that is not a typo, nineteen years and $18,299.32, off your loan? Make a one time payment of $4,000 in second month. So instead of paying $23,097.30 of interest over 30 years, you only pay $4,797.98 of interest over 11 years, for this one loan.