Page 84 - Classical Singer magazine 2019 Fall University Issue

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I Paying that Chunk of Change BY DANA LYNNE VARGA
Paying university tuition, fees, and books can feel like an insurmountable obstacle. Arm yourself with as much knowledge as you can in tackling this hurdle.
t is no secret that the cost of if you do not make payments during entire 30 years to pay o the loan, the college tuition has skyrocketed school, you will end up with a balance total interest paid will be a whopping in recent years. According to the that is higher than you started with. $57,919 on top of the $50,000 you
College Board (www.collegeboard The most important thing to already took out. Basically, you are
.org), the average cost of a bachelor’s degree in 2019 is a whopping $35,830 per year for private colleges. The average cost for state residents at public colleges is $10,230 a year, and $26,290 for out-of-state residents.
A master’s degree can cost up to $120,000 depending on the institution and its location!
Let’s Talk Loans
Most people today have no choice but to take out student loans. There are two types of loans, subsidized and unsubsidized. With a subsidized loan, your interest does not grow while you are in school, but after graduation the interest becomes your responsibility. An unsubsidized loan accrues interest from the get-go—so
84 Classical Singer | September/October 2019
consider with any loan is the interest rate. The longer it takes to pay back a loan, the more interest it accrues (this is called compound interest).
It is essential that you understand how it works and calculate the actual amount you will pay back after interest. There are plenty of great resources online to help you calculate what you will pay over the life of a loan. A popular one is www.bankrate. com/calculators/college-planning/ loan-calculator.aspx.
Using this calculator, you will see that if you take out a $50,000 loan for graduate school with a 6 percent interest rate and a 30-year term, your minimum monthly payment will only be $300—but if you pay only that minimum each month and take the
paying more than double the amount of the original loan you took out, for a total of $107,919.
It would be better to pay the loan o in 15 years. In this case, your monthly payment would be higher at $422, but the total interest paid would be $25,947 (or about half the amount of the original loan).
Armed with this information, set your student loan debt cap. This is the maximum amount of money you are willing and able to spend per year and should include additional funds needed for living expenses. While you are a student, it is always better to take on additional student loans for living expenses than to carry a balance on a credit card with a high annual percentage rate.
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