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.

Financial Prison

KN Debts

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.

KN Sallie Mae 9 percent 12178.42 - 88.60. INCREASING PRINCIPALpng

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?

KN Sallie Mae LoansKN current repayments depicted as increasing the debt due to monthly payment not covering even the principal and interest chargedThe 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.

KN Sallie Mae 9 percent 12178.42 - 88.60

And pay off year is 2045

 KN Pay off date 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.

 KN one 4000 payment jumped amortizaztion schedule ahead 19 years

KN Total Interest payments over 30 yr life of loan if monthly payments are $97.99How 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.

KN Sallie Mae 9 percent 12178.42 - 97.99.- 4000 ONE TIME PRINCIPAL ONLY


KN total interest paid is only 4,797.98 due to 4,000 one time principal only payment

January 8, 2015 · Jennifer · No Comments
Tags: , , , ,  · Posted in: 529 vs 7702, COLLEGE SAVINGS PLANS, Comparison College Savings, Get out of Financial Prison, Save Interest with Student Loans, STUDENT LOAN MISINFORMATION, Uncategorized

Leave a Reply