The amount of debt for student loans in the United States is over $1.5 trillion! Among all ages, 25% of Americans have student loan debt. The average amount they have had to repay is over $37,000 and that comes out to payments of almost $400 each month.
Here is a quiz that will help you figure out how much your child will owe in student loans at the end of their undergraduate degree. You will need to do some math here, and it will not be exact, but it should help you realize the high cost of education. Be sure to fill out your FAFSA early and check in with your school's financial aid office
- Public School (in-state) - yearly tuition cost = $10,000 (for out-of-state, use private school tuition cost)
- Private School - yearly tuition cost = $35,000+
2. Are they getting an Associates Degree or a Bachelor's Degree?
- Associate's Degree (tuition cost times 2)
- Bachelor's Degree (standard tuition cost times 4)
3. Interest rate on loan? (Save this for later)
4. Is your child living on campus?
- Yes - add $10,000
- No, renting apartment - add $8,000
- No, staying at home rent free - no cost
5. What is your combined gross monthly income?
- Below $20,000 - Automatic Pell Grant (subtract $6,000 per year)
- Below $50,000 - Possible Pell Grant (subtract $3,000 per year)
- Above $50,000 - probably no Pell Grant
6. Will your child study education and agree work in a low-income public school?
- Yes - Possible loan forgiveness programs
7. Will your child study Math, Engineering, or Technology?
- Yes - Possible scholarships up to $25,000 per year through Buick Achievers Scholarship Program
8. Did your child score at least a 26 on ACT or 1200 on SAT and have at least a 3.5 GPA?
- Yes - Possible scholarships of up to $40,000 per year through Jack Kent Cooke Foundation.
9. How much can you as the Parent afford to pay?
- Subtract that amount per year
10. Add up your total and subtract any other scholarships you are confident you are eligible to receive.
11. Student Loan Interest: While this is not exact, for a 6% interest rate loan, you will pay about $330 in interest for each $1,000 you borrow. You will pay about $210 per $1,000 for a 4% interest loan. Add that to your total.
12. Finally, divide your total loan cost by 120 (12 months per year for 10 years). That number will be the monthly payment you will have to make to pay off your loan.
A $40,000 loan (6%) + $13,290 interest = $53,290 total would leave you with a monthly payment of about $444
(This is about average for most student loans!)
A $20,000 loan (6%) + $6,645 interest = $26,645 total would leave you with a monthly payment of about $222
If the total loan seems way too high, don't despair. There are lots of scholarships out there, and some of the private schools with high tuitions end up giving out 50, 60, even 70% need-based scholarships and grants. So it is very important to fill out your FAFSA early and meet with your financial aid office today.