If you attended Mt. IveySchmivey—with a 4 year tuition of $125,000—and paid a monthly loan payment of $562 (roughly 15% of your $45,000 salary as a social worker), how long would it take you to pay off a student loan at a 5% interest rate?

Question

shaleiah · Answer

@jim_thompson5910

shaleiah · Answer

@reemii

usukidoll · Answer

well it's going to be a lot... it's best if that social worker majored in something else or go public college . cuz that's ridiculous amount of years to pay that off

shaleiah · Answer

here are the choices: 
a. 5 yrs. 3 mos.
 b. 35 yrs. 11 mos.
 c. 52 yrs. 5 mos.
 d. 9 yrs 2 mos.

shaleiah · Answer

Probably 35 yrs

usukidoll · Answer

$562 + that interest rate would make it
562+28 = 590 a month 
590 x 12 months = 7080 a year

it could be 35 years... try that. . . but there's no way that loan would be paid in less than 10 years.

shaleiah · Answer

incorrect

usukidoll · Answer

the last choice would make the total loan paid back to be at least $60,000. maybe that's it?

usukidoll · Answer

the 35 year option would be over $200,000+ paid back... I'm just going manual on this.

jim_thompson5910 · Answer

I tried using this calculator https://www.calcxml.com/calculators/pay-off-loan and I get this result http://prntscr.com/azmlrb so that's not good

shaleiah · Answer

xD

usukidoll · Answer

oh ... unless we're counting... accrued interest.

jim_thompson5910 · Answer

yeah usually the interest compounds over time. Not always though

usukidoll · Answer

whoops x.x that means interest charged per day of the whole calendar month which I failed to do on this... I just applied 5% interest per month.. uh oh

jim_thompson5910 · Answer

Now I used this calculator http://www.bankrate.com/calculators/college-planning/loan-calculator.aspx to figure out the monthly payment. I typed in 36 years and the monthly payment came out to be $624.44 which is the lowest you can go. If you pay larger amounts, then you'll pay it back faster http://prntscr.com/azmmus

shaleiah · Answer

I guessed '52 yrs and 5 months' <--- correct choice.

jim_thompson5910 · Answer

so either

a) you'll never pay it off
or
b) the interest isn't being compounded

jim_thompson5910 · Answer

oh I missed that entirely. I didn't see the 52 years option

usukidoll · Answer

wow that social worker is gonna die of old age before that happens

usukidoll · Answer

a real good lesson here...never major in a s**** field.

jim_thompson5910 · Answer

52 is so high that the calculator won't allow it. It only says 40 is the highest it can go. So definitely very unusually high.

usukidoll · Answer

I thought loans are forgiven after 20 years of repayment unless those are private loans then uh oh

shaleiah · Answer

Thanks guys!