MATH 108X - Student Loans Project

Project Goal: To learn about student loans and how the length of time to pay off the loan as well as
the amount borrowed effects your financial future.

Omar is a single male student with 6 more semesters to graduate. After thinking carefully about his
finances, he decided he needs to take out a student loan to finish school.
Omar estimated that he will need $4,160 per semester to pay for the essentials of housing, tuition,
books, food, travel, and personal items. He earns $1,250 per semester, but will need to borrow the
remaining amout each semester. Omar was approved to take out one loan for each his remaining six
semesters for up to $4,992 per loan.

Omar must decide if he should: (1) take out the full amount of student loans being offerred, which
would make life really nice right now, or: (2) only take out exactly what is needed, which would be
just enough to get by on right now, but would make life easier after he graduates.

Identify at least 2 variables and at least 2 assumptions in Omar's situation.

Variables: the cost of living can change, his tuition and books could increase.
the loan amount can vary

Assumptions: loan rate will not change, essential expenses will remain stable, his
income will remain the same

Omar found the APR 4.45% on the Federal Student Aid Website. To make calculations easier he
assumes that the rate will stay the same for all 6 semesters. Even though he realizes that prices and
wages change, he also assumes that his essenntial expenses will stay close to $4160, and that he can
earn about $1250 each semester. He plans to use a 10-year loan term. These assumptions make it
easier for Omar to apply quantitative tools to his situation.
 What is the total amount of money Omar needs to finish
school? $24,960.00

How much money will Omar earn on own? $7,500.00

What is the minimum amount of money that Omar needs to

borrow? $17,460.00

What is the maximum amount of money that Omar could

borrow? $29,952.00

Complete the 2 Amortization Schedules to the right to compare loans.

If Omar takes the maximum loan amount and puts it together

with his earnings, how much extra money would he have for $2,082.00
each of his remaining 6 semesters?

Omar created these charts to help him make a good decision.

Monthly Payment Total Payment Compar- Total Interest Com

Comparison ison ison
$40,000.00
$450.00 $8,000.00

$400.00 $35,000.00
$7,000.00

$350.00 $30,000.00
$6,000.00
$300.00 $25,000.00
$5,000.00
$250.00 $20,000.00 $4,000.00
$200.00 $15,000.00 $3,000.00
$150.00 $10,000.00 $2,000.00
$100.00
$5,000.00 $1,000.00
$50.00
$0.00 $0.00
$0.00 Borrowing the Bor
Borrowing the full Borrowing just full amount al- wha
amount allowed what is needed lowed
 $10,000.00 $2,000.00
$100.00
$5,000.00 $1,000.00
$50.00
$0.00 $0.00
$0.00 Borrowing the Bor
Borrowing the full Borrowing just full amount al- wha
amount allowed what is needed lowed

Which loan option do you think would be best for Omar's situation?

I think the best loan option would be the minimum loan amount so he
doesn't incur too much debt after graduation.

Explain why you chose this loan option for Omar. Include other things that Omar
should consider when making a decision about student loans.

We choose the minimum loan amount for Omar because the interest rate would be
much larger on the maximum loan that he would have to pay. Also, because he
needs to think about his future living expenses. If you look at the bar graphs you can
see that his payments would be $120 more a month and the interest almost double
if he took the maximum loan. He has to consider when he is living on his own that
his expenses will rise significantly and he needs to factor in his student loan debt.
Number Check: 7 years of paying down student loans. Month 84: Column O, t
minimum loan, Omar still owes $6073.50. Month 84: Column U, the maximum
loan, Omar still owes $10,418.86!!!

Number Check: For month 120 Column O and Column U shoul

be zero!!
Number Check: For month 120 Column O and Column U shoul
be zero!!
ct

o pay off the loan as well as

If you are interested in more information about

student loans, browse this website.

thinking carefully about his

.
sentials of housing, tuition,
but will need to borrow the
an for each his remaining six

oans being offerred, which

s needed, which would be
raduates.

n.

books could increase.

will remain stable, his

e calculations easier he
h he realizes that prices and
se to $4160, and that he can
hese assumptions make it

Omar's Minimum Loan Amount

Loan Amount:
Loan Interest Rate:
 Years to Repay Loan Amount:
Monthly Payment:
Total Payments:
$24,960.00 Total Interest:

$7,500.00 Payment =
Month Beginning Balance To Interest
1 $ 17,460.00 $ 64.75
$17,460.00 2 $ 17,344.22 $ 64.32
3 $ 17,228.00 $ 63.89
4 $ 17,111.36 $ 63.45
$29,952.00 5 $ 16,994.28 $ 63.02
6 $ 16,876.77 $ 62.58
o compare loans. 7 $ 16,758.82 $ 62.15
Hint
8 $ 16,640.43 $ 61.71
9 $ 16,521.61 $ 61.27
$2,082.00 10 $ 16,402.35 $ 60.83
11 $ 16,282.64 $ 60.38
12 $ 16,162.49 $ 59.94
13 $ 16,041.89 $ 59.49
14 $ 15,920.85 $ 59.04
15 $ 15,799.36 $ 58.59
16 $ 15,677.41 $ 58.14
ood decision. 17 $ 15,555.02 $ 57.68
18 $ 15,432.17 $ 57.23
19 $ 15,308.87 $ 56.77
Total Interest Compar-
20 $ 15,185.10 $ 56.31
ison
21 $ 15,060.88 $ 55.85
$8,000.00 22 $ 14,936.20 $ 55.39
$7,000.00 23 $ 14,811.06 $ 54.92
24 $ 14,685.45 $ 54.46
$6,000.00
25 $ 14,559.38 $ 53.99
$5,000.00 26 $ 14,432.84 $ 53.52
$4,000.00 27 $ 14,305.83 $ 53.05
28 $ 14,178.34 $ 52.58
$3,000.00
29 $ 14,050.39 $ 52.10
$2,000.00 30 $ 13,921.96 $ 51.63
$1,000.00
31 $ 13,793.06 $ 51.15
32 $ 13,663.67 $ 50.67
$0.00 $ 13,533.81 $ 50.19
Borrowing the Borrowing just 33
full amount al- what is needed
lowed
 $2,000.00

$1,000.00

$0.00
Borrowing the Borrowing just
full amount al- what is needed 34 $ 13,403.47 $ 49.70
lowed
35 $ 13,272.64 $ 49.22
36 $ 13,141.33 $ 48.73
uation? 37 $ 13,009.53 $ 48.24
38 $ 12,877.24 $ 47.75
an amount so he 39 $ 12,744.46 $ 47.26
40 $ 12,611.19 $ 46.77
41 $ 12,477.42 $ 46.27
42 $ 12,343.16 $ 45.77
43 $ 12,208.40 $ 45.27
44 $ 12,073.14 $ 44.77
45 $ 11,937.38 $ 44.27
46 $ 11,801.12 $ 43.76
47 $ 11,664.35 $ 43.26
her things that Omar 48 $ 11,527.07 $ 42.75
. 49 $ 11,389.28 $ 42.24

50 $ 11,250.99 $ 41.72
interest rate would be 51 $ 11,112.18 $ 41.21
. Also, because he 52 $ 10,972.85 $ 40.69
the bar graphs you can 53 $ 10,833.01 $ 40.17
interest almost double 54 $ 10,692.65 $ 39.65
iving on his own that 55 $ 10,551.77 $ 39.13
s student loan debt. 56 $ 10,410.37 $ 38.61
57 $ 10,268.44 $ 38.08
58 $ 10,125.99 $ 37.55
59 $ 9,983.01 $ 37.02
60 $ 9,839.50 $ 36.49
61 $ 9,695.45 $ 35.95
62 $ 9,550.87 $ 35.42
63 $ 9,405.76 $ 34.88
64 $ 9,260.11 $ 34.34
65 $ 9,113.91 $ 33.80
66 $ 8,967.18 $ 33.25
67 $ 8,819.90 $ 32.71
68 $ 8,672.08 $ 32.16
69 $ 8,523.70 $ 31.61
70 $ 8,374.78 $ 31.06
71 $ 8,225.30 $ 30.50
72 $ 8,075.27 $ 29.95
73 $ 7,924.69 $ 29.39
74 $ 7,773.54 $ 28.83
75 $ 7,621.84 $ 28.26
 76 $ 7,469.57 $ 27.70
77 $ 7,316.74 $ 27.13
78 $ 7,163.34 $ 26.56
79 $ 7,009.37 $ 25.99
80 $ 6,854.83 $ 25.42
81 $ 6,699.72 $ 24.84
82 $ 6,544.03 $ 24.27
83 $ 6,387.77 $ 23.69
84 $ 6,230.92 $ 23.11
. Month 84: Column O, the 85 $ 6,073.50 $ 22.52
Column U, the maximum 86 $ 5,915.49 $ 21.94
87 $ 5,756.89 $ 21.35
88 $ 5,597.71 $ 20.76
89 $ 5,437.93 $ 20.17
90 $ 5,277.57 $ 19.57
91 $ 5,116.61 $ 18.97
92 $ 4,955.05 $ 18.37
93 $ 4,792.89 $ 17.77
94 $ 4,630.13 $ 17.17
95 $ 4,466.77 $ 16.56
96 $ 4,302.80 $ 15.96
97 $ 4,138.23 $ 15.35
98 $ 3,973.04 $ 14.73
99 $ 3,807.24 $ 14.12
100 $ 3,640.83 $ 13.50
101 $ 3,473.80 $ 12.88
102 $ 3,306.15 $ 12.26
103 $ 3,137.87 $ 11.64
104 $ 2,968.98 $ 11.01
105 $ 2,799.46 $ 10.38
106 $ 2,629.31 $ 9.75
107 $ 2,458.52 $ 9.12
108 $ 2,287.11 $ 8.48
109 $ 2,115.06 $ 7.84
110 $ 1,942.37 $ 7.20
111 $ 1,769.04 $ 6.56
112 $ 1,595.07 $ 5.92
113 $ 1,420.45 $ 5.27
114 $ 1,245.19 $ 4.62
115 $ 1,069.27 $ 3.97
116 $ 892.70 $ 3.31
and Column U should 117 $ 715.48 $ 2.65
118 $ 537.60 $ 1.99
and Column U should
119 $ 359.07 $ 1.33
120 $ 179.87 $ 0.67
Loan Amount Omar's Maximum Loan Amount
$ 17,460.00 Loan Amount:
4.45% Loan Interest Rate:
 10 Years to Repay Loan Amount:
$ 180.53 Monthly Payment:
$ 21,663.86 Total Payments:
$4,203.86 Total Interest:

$180.53 Payment =
To Principal Ending Balance Month Beginning Balance To Interest
$115.78 $ 17,344.22 1 $29,952.00 $ 111.07
$116.21 $ 17,228.00 2 $29,753.38 $ 110.34
$116.64 $ 17,111.36 3 $29,554.01 $ 109.60
$117.08 $ 16,994.28 4 $29,353.91 $ 108.85
$117.51 $ 16,876.77 5 $29,153.07 $ 108.11
$117.95 $ 16,758.82 6 $28,951.49 $ 107.36
$118.38 $ 16,640.43 7 $28,749.15 $ 106.61

$118.82 $ 16,521.61 8 $28,546.07 $ 105.86

$119.26 $ 16,402.35 9 $28,342.23 $ 105.10
$119.71 $ 16,282.64 10 $28,137.63 $ 104.34
$120.15 $ 16,162.49 11 $27,932.28 $ 103.58
$120.60 $ 16,041.89 12 $27,726.17 $ 102.82
$121.04 $ 15,920.85 13 $27,519.29 $ 102.05
$121.49 $ 15,799.36 14 $27,311.64 $ 101.28
$121.94 $ 15,677.41 15 $27,103.23 $ 100.51
$122.40 $ 15,555.02 16 $26,894.04 $ 99.73
$122.85 $ 15,432.17 17 $26,684.07 $ 98.95
$123.30 $ 15,308.87 18 $26,473.33 $ 98.17
$123.76 $ 15,185.10 19 $26,261.81 $ 97.39
$124.22 $ 15,060.88 20 $26,049.50 $ 96.60
$124.68 $ 14,936.20 21 $25,836.40 $ 95.81
$125.14 $ 14,811.06 22 $25,622.52 $ 95.02
$125.61 $ 14,685.45 23 $25,407.84 $ 94.22
$126.07 $ 14,559.38 24 $25,192.36 $ 93.42
$126.54 $ 14,432.84 25 $24,976.09 $ 92.62
$127.01 $ 14,305.83 26 $24,759.01 $ 91.81
$127.48 $ 14,178.34 27 $24,541.13 $ 91.01
$127.95 $ 14,050.39 28 $24,322.44 $ 90.20
$128.43 $ 13,921.96 29 $24,102.94 $ 89.38
$128.90 $ 13,793.06 30 $23,882.62 $ 88.56
$129.38 $ 13,663.67 31 $23,661.49 $ 87.74
$129.86 $ 13,533.81 32 $23,439.54 $ 86.92
$130.34 $ 13,403.47 33 $23,216.76 $ 86.10
$130.83 $ 13,272.64 34 $22,993.16 $ 85.27
$131.31 $ 13,141.33 35 $22,768.73 $ 84.43
$131.80 $ 13,009.53 36 $22,543.47 $ 83.60
$132.29 $ 12,877.24 37 $22,317.37 $ 82.76
$132.78 $ 12,744.46 38 $22,090.44 $ 81.92
$133.27 $ 12,611.19 39 $21,862.66 $ 81.07
$133.77 $ 12,477.42 40 $21,634.04 $ 80.23
$134.26 $ 12,343.16 41 $21,404.57 $ 79.38
$134.76 $ 12,208.40 42 $21,174.25 $ 78.52
$135.26 $ 12,073.14 43 $20,943.07 $ 77.66
$135.76 $ 11,937.38 44 $20,711.04 $ 76.80
$136.26 $ 11,801.12 45 $20,478.15 $ 75.94
$136.77 $ 11,664.35 46 $20,244.39 $ 75.07
$137.28 $ 11,527.07 47 $20,009.77 $ 74.20
$137.79 $ 11,389.28 48 $19,774.27 $ 73.33
$138.30 $ 11,250.99 49 $19,537.91 $ 72.45

$138.81 $ 11,112.18 50 $19,300.66 $ 71.57

$139.32 $ 10,972.85 51 $19,062.54 $ 70.69
$139.84 $ 10,833.01 52 $18,823.53 $ 69.80
$140.36 $ 10,692.65 53 $18,583.64 $ 68.91
$140.88 $ 10,551.77 54 $18,342.86 $ 68.02
$141.40 $ 10,410.37 55 $18,101.18 $ 67.13
$141.93 $ 10,268.44 56 $17,858.61 $ 66.23
$142.45 $ 10,125.99 57 $17,615.14 $ 65.32
$142.98 $ 9,983.01 58 $17,370.77 $ 64.42
$143.51 $ 9,839.50 59 $17,125.49 $ 63.51
$144.04 $ 9,695.45 60 $16,879.30 $ 62.59
$144.58 $ 9,550.87 61 $16,632.20 $ 61.68
$145.11 $ 9,405.76 62 $16,384.18 $ 60.76
$145.65 $ 9,260.11 63 $16,135.24 $ 59.83
$146.19 $ 9,113.91 64 $15,885.38 $ 58.91
$146.73 $ 8,967.18 65 $15,634.59 $ 57.98
$147.28 $ 8,819.90 66 $15,382.87 $ 57.04
$147.83 $ 8,672.08 67 $15,130.22 $ 56.11
$148.37 $ 8,523.70 68 $14,876.63 $ 55.17
$148.92 $ 8,374.78 69 $14,622.10 $ 54.22
$149.48 $ 8,225.30 70 $14,366.63 $ 53.28
$150.03 $ 8,075.27 71 $14,110.21 $ 52.33
$150.59 $ 7,924.69 72 $13,852.84 $ 51.37
$151.14 $ 7,773.54 73 $13,594.51 $ 50.41
$151.71 $ 7,621.84 74 $13,335.23 $ 49.45
$152.27 $ 7,469.57 75 $13,074.99 $ 48.49
$152.83 $ 7,316.74 76 $12,813.78 $ 47.52
$153.40 $ 7,163.34 77 $12,551.60 $ 46.55
$153.97 $ 7,009.37 78 $12,288.45 $ 45.57
$154.54 $ 6,854.83 79 $12,024.32 $ 44.59
$155.11 $ 6,699.72 80 $11,759.21 $ 43.61
$155.69 $ 6,544.03 81 $11,493.12 $ 42.62
$156.26 $ 6,387.77 82 $11,226.05 $ 41.63
$156.84 $ 6,230.92 83 $10,957.98 $ 40.64
$157.43 $ 6,073.50 84 $10,688.92 $ 39.64
$158.01 $ 5,915.49 85 $10,418.86 $ 38.64
$158.60 $ 5,756.89 86 $10,147.80 $ 37.63
$159.18 $ 5,597.71 87 $9,875.74 $ 36.62
$159.77 $ 5,437.93 88 $9,602.66 $ 35.61
$160.37 $ 5,277.57 89 $9,328.58 $ 34.59
$160.96 $ 5,116.61 90 $9,053.47 $ 33.57
$161.56 $ 4,955.05 91 $8,777.35 $ 32.55
$162.16 $ 4,792.89 92 $8,500.20 $ 31.52
$162.76 $ 4,630.13 93 $8,222.03 $ 30.49
$163.36 $ 4,466.77 94 $7,942.82 $ 29.45
$163.97 $ 4,302.80 95 $7,662.58 $ 28.42
$164.58 $ 4,138.23 96 $7,381.30 $ 27.37
$165.19 $ 3,973.04 97 $7,098.98 $ 26.33
$165.80 $ 3,807.24 98 $6,815.61 $ 25.27
$166.41 $ 3,640.83 99 $6,531.18 $ 24.22
$167.03 $ 3,473.80 100 $6,245.71 $ 23.16
$167.65 $ 3,306.15 101 $5,959.17 $ 22.10
$168.27 $ 3,137.87 102 $5,671.57 $ 21.03
$168.90 $ 2,968.98 103 $5,382.91 $ 19.96
$169.52 $ 2,799.46 104 $5,093.18 $ 18.89
$170.15 $ 2,629.31 105 $4,802.37 $ 17.81
$170.78 $ 2,458.52 106 $4,510.48 $ 16.73
$171.42 $ 2,287.11 107 $4,217.51 $ 15.64
$172.05 $ 2,115.06 108 $3,923.45 $ 14.55
$172.69 $ 1,942.37 109 $3,628.31 $ 13.45
$173.33 $ 1,769.04 110 $3,332.06 $ 12.36
$173.97 $ 1,595.07 111 $3,034.72 $ 11.25
$174.62 $ 1,420.45 112 $2,736.28 $ 10.15
$175.26 $ 1,245.19 113 $2,436.73 $ 9.04
$175.91 $ 1,069.27 114 $2,136.07 $ 7.92
$176.57 $ 892.70 115 $1,834.30 $ 6.80
$177.22 $ 715.48 116 $1,531.40 $ 5.68
$177.88 $ 537.60 117 $1,227.39 $ 4.55
$178.54 $ 359.07 118 $922.24 $ 3.42
$179.20 $ 179.87 119 $615.96 $ 2.28
$179.87 $ - 120 $308.55 $ 1.14
Loan Amount
$29,952.00
4.45%
 10
$309.70
$37,163.56
$7,211.56

$309.70
To Principal Ending Balance
$198.62 $29,753.38
$199.36 $29,554.01
$200.10 $29,353.91
$200.84 $29,153.07
$201.59 $28,951.49
$202.33 $28,749.15
$203.08 $28,546.07

$203.84 $28,342.23
$204.59 $28,137.63
$205.35 $27,932.28
$206.11 $27,726.17
$206.88 $27,519.29
$207.65 $27,311.64
$208.42 $27,103.23
$209.19 $26,894.04
$209.96 $26,684.07
$210.74 $26,473.33
$211.52 $26,261.81
$212.31 $26,049.50
$213.10 $25,836.40
$213.89 $25,622.52
$214.68 $25,407.84
$215.48 $25,192.36
$216.27 $24,976.09
$217.08 $24,759.01
$217.88 $24,541.13
$218.69 $24,322.44
$219.50 $24,102.94
$220.31 $23,882.62
$221.13 $23,661.49
$221.95 $23,439.54
$222.77 $23,216.76
$223.60 $22,993.16
$224.43 $22,768.73
$225.26 $22,543.47
$226.10 $22,317.37
$226.94 $22,090.44
$227.78 $21,862.66
$228.62 $21,634.04
$229.47 $21,404.57
$230.32 $21,174.25
$231.18 $20,943.07
$232.03 $20,711.04
$232.89 $20,478.15
$233.76 $20,244.39
$234.62 $20,009.77
$235.49 $19,774.27
$236.37 $19,537.91
$237.24 $19,300.66

$238.12 $19,062.54
$239.01 $18,823.53
$239.89 $18,583.64
$240.78 $18,342.86
$241.67 $18,101.18
$242.57 $17,858.61
$243.47 $17,615.14
$244.37 $17,370.77
$245.28 $17,125.49
$246.19 $16,879.30
$247.10 $16,632.20
$248.02 $16,384.18
$248.94 $16,135.24
$249.86 $15,885.38
$250.79 $15,634.59
$251.72 $15,382.87
$252.65 $15,130.22
$253.59 $14,876.63
$254.53 $14,622.10
$255.47 $14,366.63
$256.42 $14,110.21
$257.37 $13,852.84
$258.33 $13,594.51
$259.28 $13,335.23
$260.24 $13,074.99
$261.21 $12,813.78
$262.18 $12,551.60
$263.15 $12,288.45
$264.13 $12,024.32
$265.11 $11,759.21
$266.09 $11,493.12
$267.08 $11,226.05
$268.07 $10,957.98
$269.06 $10,688.92
$270.06 $10,418.86
$271.06 $10,147.80
$272.06 $9,875.74
$273.07 $9,602.66
$274.09 $9,328.58
$275.10 $9,053.47
$276.12 $8,777.35
$277.15 $8,500.20
$278.17 $8,222.03
$279.21 $7,942.82
$280.24 $7,662.58
$281.28 $7,381.30
$282.32 $7,098.98
$283.37 $6,815.61
$284.42 $6,531.18
$285.48 $6,245.71
$286.54 $5,959.17
$287.60 $5,671.57
$288.66 $5,382.91
$289.73 $5,093.18
$290.81 $4,802.37
$291.89 $4,510.48
$292.97 $4,217.51
$294.06 $3,923.45
$295.15 $3,628.31
$296.24 $3,332.06
$297.34 $3,034.72
$298.44 $2,736.28
$299.55 $2,436.73
$300.66 $2,136.07
$301.78 $1,834.30
$302.89 $1,531.40
$304.02 $1,227.39
$305.14 $922.24
$306.28 $615.96
$307.41 $308.55
$308.55 ($0.00)
Monthly Payment 10-Year
Borrowing the full amount allowed $309.70
Borrowing just what is needed $180.53
Total Payment 10-Year
Borrowing the full amount allowed $37,163.56

Borrowing just what is needed $21,663.86

Total Interest 10-Year

Borrowing the full amount allowed $7,211.56

Borrowing just what is needed $4,203.86