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 interest rate on the student loan.

The term of the loan.
The amount of the loan.
Assumptions: The amount he earns each semester will stay the same.
The cost of housing will stay 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
$35,000.00
$400.00 $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
Which loan option do you think would be best for Omar's situation?

Borrowing only what is needed (minimum loan). Lower payments and less
money going to interest over time.

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

Avoid debt particularly uncessary debt. He can get by with the minimum
amount and be better off after graduation when he is looking for
employment. He will have greater peace of mind with less debt.

Other considerations are the heed the prophetic guidence from our
prophet and church leaders when considering a student loan. Include
prayer as one of the steps.
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!!
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

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

oans being offerred, which

s needed, which would be
raduates.

n.

the same.

e calculations easier he
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
Borrowing the Borrowing just 33 $ 13,533.81 $ 50.19
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
r payments and less 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
er things that Omar 48 $ 11,527.07 $ 42.75
. 49 $ 11,389.28 $ 42.24
50 $ 11,250.99 $ 41.72
with the minimum 51 $ 11,112.18 $ 41.21
looking for 52 $ 10,972.85 $ 40.69
h less debt. 53 $ 10,833.01 $ 40.17
54 $ 10,692.65 $ 39.65
ence from our 55 $ 10,551.77 $ 39.13
ent loan. Include 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
119 $ 359.07 $ 1.33
120 $ 179.87 $ 0.67

Total Interest $4,203.86

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

Total interest $7,211.56

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