PAYMENT PLANS!
Topic 4-Payment Plans. There are some charts showing how the payments and interest rates are calculated. However, I could not figure out these numbers. What are the formulas and calculation of these example payments? Thanks!
Student loan interest is calculated using the simple interest formula:
Interest = (Principal)(interest rate)(time)
If the formula is applied monthly over the life of the loan, you will arrive at the numbers listed in this module (recalculating the new balance after each projected monthly payment is difficult by hand; it is easier to use one of the many loan calculators available on the internet from various lender and servicer websites).
If you have any further questions, please let me know!
