FOR IMMEDIATE
RELEASE
September 15, 2003
Back
Erickson: Student Loan Calculator Can Help
Borrowers Save
Harrisburg – State Sen. Ted Erickson (R-26) is reminding college
students and their families about an online calculator that allows
student loan borrowers to calculate their savings if they make interest
payments on their unsubsidized Federal Stafford Loans while still in
school.
Provided by American Education Services (AES), a division of the
Pennsylvania Higher Education Assistance Agency, the calculator is
available at
www.YouCanDealWithIt.com , Erickson said.
For borrowers with unsubsidized loans, interest begins accruing on
the loan at the time of disbursement. The borrower is responsible for
repaying all interest, although the payments may be deferred until after
graduation. The Interest Savings Calculator allows the borrower to enter
the amount borrowed for each semester of their schooling and their loan
interest rate.
Calculations, based on the average 10-year or 120-month repayment
schedule, determine the total value of the loan and the amount of unpaid
interest. From this the calculator determines the borrower's monthly
payments (after graduation) and total interest paid in the scenario in
which the borrower paid interest on his loan while in school. The
calculator also computes the borrower's monthly payments and total
interest paid if the borrower chooses to defer payment on interest until
after graduation.
"Students and parents don't need to be reminded that college tuition
is expensive. However, we also have to get the word out that there are
tools available to help trim those costs," said Erickson. "Borrowers can
plan better if they have all of the information, and the student loan
calculator provides them with the information necessary to make
decisions regarding interest rate payments."
For example, today's average borrower has approximately $16,000 in
student loan debt, according to PHEAA. At an interest rate of 6 percent
the borrower's total loan value is $18,841 and the unpaid interest is
$2,841. If this borrower waits until his loans enter into repayment to
begin repaying the accrued interest, his monthly student loan payment
will be $210 and the total interest paid on the loan will be $9,232.
However, if this student chooses to begin making interest payments on
his loan while he is still in school, his monthly payment upon entering
repayment will only be $180 and the total interest paid on the loan will
be $8,091. Making interest payments while in school will save this
student $1,141.
Unsubsidized Federal Stafford Loans are available to students who do
not qualify for federal interest subsidy or who only qualify for partial
subsidy. In comparison, subsidized loans are awarded based on need; for
these the government pays all interest that accrues while the borrower
is in school, in his six-month grace period or on a deferment.
The Interest Savings Calculator is one of several financial
calculators found at
www.YouCanDealWithIt.com . The website is a provided as a public
service by AES. It assists recent and soon-to-be college graduates with
life after college, providing resume tips, information on getting a job,
finding an apartment, buying a car, budgeting, debt management and more.
CONTACT: Chuck McDonald (717) 787-1350
