Question

It’s time for roxanne to start repaying her student loans, which are amortized over the next ten years. Her first month’s payment due is $396. How much should she expect to owe next month?

Answer 1

She anticipates being in debt the following month. Fixed payments are made for a maximum of ten years (in the case of consolidation loans, ten to thirty years).

Is a student loan repaid over time?

Because they are installment loans with regular payments, student loans are typically amortized. Principal and interest payments make up the division of payments. By making additional payments or, if it makes financial sense, refinancing, borrowers can make their amortization schedules work out better.

How is the interest on a student loan calculated?

To figure out how much interest is due on a daily basis, you first divide the loan's annual interest rate by 365. Let's say you have a $10,000 loan with a 5% annual interest rate. To arrive at a daily interest rate of 0.000137, you would divide that rate by 365, or 0.05  365.

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