1. What is the Student Loan Simulator?

The Student Loan Simulator helps estimate monthly payments under different repayment plans, including standard repayment and income-driven repayment (IDR) options. It provides financial planning insights for student borrowers.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of months (unitless)
• \( Income \) — Annual income (USD)
• \( percentage \) — IDR percentage (decimal)
• \( PMT \) — Monthly payment (USD)

Explanation: The standard formula calculates fixed payments over the loan term, while the IDR formula calculates payments as a percentage of income.

3. Importance of Loan Simulation

Details: Understanding potential loan payments helps students make informed borrowing decisions, choose appropriate repayment plans, and plan their post-graduation finances.

4. Using the Calculator

Tips: Enter loan principal, interest rate, and term for standard repayment. For IDR plans, include your annual income. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between standard and IDR plans?
A: Standard plans have fixed payments over 10 years, while IDR plans adjust payments based on income and family size.

Q2: How accurate are these estimates?
A: Estimates are approximate. Actual payments may vary based on loan specifics and program requirements.

Q3: What percentage of income is used for IDR?
A: Typically 10-20% of discretionary income, depending on the specific IDR plan.

Q4: Are there loan forgiveness options?
A: Some IDR plans offer forgiveness after 20-25 years of qualifying payments. Public Service Loan Forgiveness is available after 10 years.

Q5: Should I pay more than the minimum?
A: Paying more reduces total interest paid, but IDR plans may have different strategies depending on forgiveness goals.