Reviewing Your Student Loan Summary

10 Jul

Many Purdue students received a summary of their estimated student loan debt recently via email. While it may be a sobering reminder of your current student loan load, it can be a good time to think about your loan debt.DFA logo

Knowing what you owe in total and your monthly payment will be important as you plan your future. Being mindful of your debt compared to your future earnings is crucial in making the investment in your education worthwhile.

Most experts recommend keeping your loan payments below 20% of your monthly income, or they will become a massive financial burden. A good approximation for repayment is that your monthly payment equals roughly 1% of what you borrow, or about $100 every month for borrowing $10,000.

42% of college seniors expect to earn more than $50,000 in their first job out of college, but only 23% of employers actually pay this amount to new grads. It’s important to keep in mind the average salary in your field is just that, an average, not necessarily the starting wage.

When it comes to repaying your loans, paying more than the minimum will go a long way in shortening your repayment length. If you do so, be sure to utilize the best payment method that works for you either targeting the smallest debts or the highest interest rates first. If your minimum payments are looking higher than you can afford, consider going on an income-driven repayment plan to help keep your loan from becoming too big of a burden.

As you go through school, keep in mind that there is a borrowing limit for federal loans. While the actual limit varies by dependent and independent status, as well as being a graduate student, for most dependent undergrads it is $31,000. However, due to yearly limits on borrowing most students don’t have to worry about this unless they end up attending for more than four years.

Be sure to average 15+ credits per semester in order to stay on track for a four year graduation, only one extra year can cost you over $138,000 in extra tuition, lost wages, and lost retirement savings.

If you have money from working in the summer and are wondering how you can pay down your loans, the first step is finding out which loan servicer has your loans. Once you have their information, you should be able to set up an account and make your payments online!

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Hopefully the loan debt summary has given you good information to borrow smart now and know your options for repayment in the future. Remember, you can always contact the Financial Aid office during our business hours (8 a.m. – 5 p.m., Monday – Friday) by calling or stopping in for any reason, or if it’s not a pressing matter feel free to email us at facontact@purdue.edu.

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