In college the big thing on your mind is graduation. After graduation, you *will* have bills to pay—you need necessities like a home, food, car insurance, electricity and if you borrowed to get your education, you’d have student loan payments.

BigFuture.CollegeBoard.org reports the average cost in the United States for 4-year degrees were:

- Public (in-state) $38,000
- Public (out-of-state) $96,000
- Private $130,000

The average interest rate is 6.8% on federal student loans. Traditional dependent students can qualify for a maximum of $31,000 undergraduate federal student loans and independent students undergraduate loan limit is $57,500. To finance the total needed for college, you would need both federal and private loans to cover the cost of education. Private loans and federal loans will have different interest rates currently from 5% to 14 % (see Nerd Wallet for private loan example rates).

To simplify, we used 6.8% to compile the following examples and we hope you find this information helpful!

## Monthly Student Loan Payments After Graduation

**Borrow $38,000 for Tuition at Public College (in-state)**

- 10 years of monthly payments of $433
- 15 years of monthly payments of $334
- 20 years of monthly payments of $287

**Savings Calculations on Quicker Repayment**

- 10 years versus 20 is a difference of $146 or about $5 per day,
*and you save*$35,000 in interest - 10 years versus 15 is a difference of $99 or about $3 per day,
*and you save*$22,000 in interest - 15 years versus 20 is a difference of $47 or about $1.50 per day,
*and you save*$13,000 in interest

## Easy Ways to Make the Daily Savings Goal

Consider that spending $1.50 to $5 per day less just means you make a small sacrifice of something that is NOT a necessity, like doing without energy drinks, specialty coffees or soda. If you consider that little choice of doing without could save you between $13,000 and $35,000 in the long run, maybe that will fuel your motivation!

**Borrow $96,000 for Tuition at Public College (in-state)**

- 10 years of monthly payments of $1,100
- 15 years of monthly payments of $848
- 20 years of monthly payments of $730

**Savings Calculations on Quicker Repayment**

- 10 years versus 20 is a difference of $370 or about $12 per day,
*and you save*$54,000 in interest - 10 years versus 15 is a difference of $252 or about $8 per day,
*and you save*$34,000 in interest - 15 years versus 20 is a difference of $118 or about $4 per day,
*and you save*$20,000 in interest

## Ideas to Make the Daily Savings Goal

Saving $4 to $12 per day might take a more significant commitment. Perhaps bringing your lunch to work, eating dinner out less, or more carefully budgeting your entertainment expenses might be the solution that helps you choose a shorter time to repay.

**Borrow $130,000 for Tuition at a Private College**

- 10 years of monthly payments of $1,492
- 15 years of monthly payments of $1,151
- 20 years of monthly payments of $990

**Savings Calculations on Quicker Repayment**

- 10 years versus 20 is a difference of $502 or about $17 per day,
*and you save*$77,000 in interest - 10 years versus 15 is a difference of $341 or about $11 per day,
*and you save*$49,000 in interest - 15 years versus 20 is a difference of $161 or about $5 per day,
*and you save*$28,000 in interest

## Before You Borrow, Justify the Expense

If you have chosen to borrow enough to attend a private college, we recommend that you justify this expense by taking a realistic look at the job market for your chosen profession before you borrow. You will need to make well over $100,000 a year to afford your payments, and with that, you will still need to make excellent choices on how you spend your money to afford payments, at the low end, of $1,000 per month.

## How Much Will You Need to Earn to Payback Your Loans?

FinAid.org (created by Monster.com) has a helpful calculator that can help you figure out how much you need to make to afford repayment on your education. The formula they use is explained as follows:

*It is estimated that you will need an annual salary of at least [$ figure inserted] to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.7. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only [$ figure inserted], but you may experience some financial difficulty. This corresponds to a debt-to-income ratio of 1.1.*

The median individual income in the United States was $62,000 in June of 2018. Therefore, if the job market holds and you attended a public in-state college you have a better chance of being able to make your payments more easily. If you stretch and go out-of-state or private, you’d need to be in a field where jobs pay 6-figure salaries.

### Education is an essential part of achieving your dreams.

### Here, we hope to have given you a better idea of monthly payments and how that affects your life.

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