How to Calculate Interest on Student Loan

How well did students understand the terms of the agreement when they signed their student loans? Interest rates, for instance, are among the most complex aspects of student loans, and it takes research to have a good understanding of how interest rates are set, how interest accrues, and how payments are set to go to the principal balance and interest charges.

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The interest rate pertains to how much one has to pay in order to borrow the funds. It’s the additional cost one pays on top of the principal – in short, it’s the cost of doing business with the lender. Interest is a percentage of the principal, and it’s charged daily, so the longer it takes to pay off the balance, the most interest piles up.

A borrower’s required loan payment is the same every month, but when payment is made, interest is paid before any money goes into reducing the principal. The interest rate, with student loans typically compounded every day, is divided by the number of days in the year. The borrower is charged each day based on their outstanding balance.

With a $10,000 balance and at 4.45 percent interest rate, the daily interest rate is computed by dividing 4.45 percent by 365 in order to get 0.012 percent. That’s $1.20 based on the $10,000, and $1.20 is added to the loan balance, bringing it to $10,001.20. When interest is compounded the next day, one will pay interest on that total amount, which looks like $455.02 in interest by year’s end.

If one is able to do so, it’s recommended to make interest payments while in school to save money in the long run.

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Performance SLC assists those who need help with their federal student loans by providing consulting and document processing services. Learn more by visiting this website.

Why Companies Should Commit To Helping New Employees Pay Off Student Loans

Any employer would want their employees to have a great employment experience, especially those coming into a professional working setting for the first time. Providing a benefits package that addresses their needs speaks directly to their satisfaction with you and the company.

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A lot of millennials accept employment based on how well the job can help them in their quest to achieve freedom from student loan debt. A study done by The American Student Assistance, a nonprofit dedicated to eliminating financial barriers to attending college, showed that employees aged 22 to 33 stress about their student debt so often that it affects their health.

So much stress, in fact, that 86 percent of the 502 survey respondents said that they are willing to commit five years of their career to a job that will help them pay their debt back. Quality employees create more value for companies. Developing younger workers into valuable contributors that directly impact the health and success of your business is a must. In fact, 72 percent of employees say a benefits package offering is extremely or very important to their job satisfaction.

More importantly, financial assistance programs make your workers want to stay in your company. Remember that regular turnover hits your bottom line and offering benefits packages that are aligned with employee expectations (increasingly manifested in student loan payment assistance) play a huge role in employer loyalty.

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Seeking the help of Performance SLC alleviates the frustration out of the student loan payment process. More on the company’s services here.

Identifying student loan scams and how to warn others about them

One of the saddest things in the world is that there exist people who take advantage of others. Scammers, con artists, swindlers, whatever people want to call them, they are a stain on the planet. Even students and parents applying for student loans are not immune to these scammers. Here are a few ways of identifying student loan scams so people can warn others. 

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Pay schemes 

When people are asked to pay upfront, or they’re informed of monthly fees to get help, it’s most likely a scam. Anything people can do on their own, companies shouldn’t charge for it. In connection to this, people have to know that it is illegal for companies that offer to help pay student loans to collect fees via telephone before settling, or at least lowering a customer’s loans. 

Loan forgiveness 

Let’s get one thing straight – there is no such thing as “immediate loan forgiveness.” There are a number of reputable loan forgiveness programs out there, but all of them eliminate federal student loans after some time. Loan forgiveness programs can take from as “short” as 10 years to as long as 25. There are repayment estimators to help loan holders calculate their monthly payment and estimate how long they’ll be paying. 

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Performance SLC helps its clients through the student loan payment process. Visit this website for more information.