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BUSINESS Monday 1 July 2019
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How much you'll really pay for that student loan

By RYAN LANE Cathy Mueller, executive
NerdWallet director of Mapping Your
Associated Press Future , a nonprofit locat-
Those who graduate col- ed in Sugar Land, Texas,
lege with student loans that helps college students
owe close to $30,000 on manage debt, says gradu-
average, according to the ated repayment may be a
most recent data from the good option for those who
Institute for College Access expect their earnings to in-
& Success. crease in the future.
But they'll likely repay thou- However, those doing well
sands more than that be- careerwise should try to
cause of interest. One key make the standard plan
to limiting interest cost is work because of its lower
choosing the right repay- interest costs.
ment plan . The bottom "It's not going to be a huge
line? Opting for lower pay- difference, but every pen-
ments will cost you more ny counts," she says.
overall. Using a tool like the EXTENDED REPAYMENT
Education Department's Total repaid: $50,027
Repayment Estimator can Monthly payment: $167
help you better understand Repayment term: 300
potential costs. Here's how months The extended plan
much $30,000 in unsubsi- In this June 20, 2019, photo a student works in the library at Virginia Commonwealth University in stretches repayment to 25
dized federal student loans Richmond, Va. years, with payments either
would cost under different Associated Press fixed or graduated. Fixed
plans at the 2019-2020 un- payments add more than
dergraduate rate of 4.53%. different option. plan if payments aren't Repayment term: 120 $20,000 to the example
STANDARD REPAYMENT Standard repayment adds more than 10% to 15% of months $30,000 balance; graduat-
Total repaid: $37,311 more than $7,000 to the your monthly income. Graduated plans start ed payments would inflate
Monthly payment: $311 loan's balance in this ex- "The monthly payment with low payments that in- your balance even more.
Repayment term: 120 ample, but that's less than would be higher, but in the crease every two years to "(Extended repayment) is
months most other options. long run (you) would save complete repayment in 10 not going to be best for a
The standard plan splits Barry Coleman, vice presi- more in interest charges," years. Despite having the lot of people," Mueller says.
loans into 120 equal pay- dent of counseling and Coleman says. same repayment term as "But it is an option."
ments over 10 years. Feder- education programs for GRADUATED REPAYMENT the standard plan, gradu- You must owe more than
al borrowers automatically the National Foundation Total repaid: $39,161 ated repayment costs $30,000 in federal student
start repayment under this for Credit Counseling, says Monthly payment: $175 to $1,850 more overall due to loans to use extended
plan, unless they choose a to stick with the standard $525 additional interest costs. repayment.q

International forum: Don't expect cheap money to do it all

BY DAVID McHUGH risks in relying too much on remain, notably related to
FRANKFURT, Germany (AP) central bank stimulus such trade tensions between
— Stocks have risen on as cuts in interest rates and the U.S. and China. U.S.
expectation of more help bond purchases that lower President Donald Trump is
from central banks, but an market borrowing costs. seeking to reduce China's
international financial fo- Those other policies include trade surplus and has im-
rum warned Sunday that government spending posed new tariffs, or import
the global recovery can't where possible on growth- taxes, while negotiating
just rely on support from friendly infrastructure as for a trade deal. Despite
the likes of the U.S. Federal well as pro-growth reforms some apparent progress at
Reserve and the European such as slashing red tape a meeting between Trump
Central Bank to get past its for business. and Chinese President Xi
current shaky stretch. "Monetary policy can no Jinping at the summit of
The admonition from the longer be the main engine leaders from the Group of
Bank for International Set- of economic growth, and 20 countries in Osaka, Ja-
tlements comes as the Fed other policy drivers need to pan, there's uncertainty
and the ECB are signaling kick in to ensure the global In this file photo dated Saturday June 22, 2019, The European about the outcome, and
that more stimulus could economy achieves sustain- Central Bank during sunset in Frankfurt, Germany. whether more tariffs might
be on the way. That mes- able momentum," the BIS Associated Press be coming.
sage from Fed chair Jay said in its annual economic "The trade tensions bring up
Powell and ECB head Ma- report. productive zombie firms industries and falling un- questions about the viabil-
rio Draghi has helped send BIS General Manager Agus- that wouldn't survive with- employment can shore up ity of existing supply chain
stock higher in Europe and tin Carstens warned that out cheap borrowing. the ailing global recover structures and the very fu-
the S&P 500 in the U.S. to a while stimulus can help in Policymakers, he said, in coming months. Rising ture of the global trading
record high. the short run, it can have need "to be mindful of all wages and less unemploy- system," Carstens said in a
The BIS is cautioning that side effects further out those tradeoffs." ment are offsetting a slow- speech to the BIS annual
governments need to such as over-inflating asset The BIS, a forum for central down in manufacturing meeting Sunday. "It bears
bring other policies into the prices such as stocks and banks based in Basel, Swit- and global trade. repeating: trade wars have
game — and that there are bonds, and feeding less zerland, said the service Still, it said significant risks no winners, only losers.q