Student Loans

How to Estimate Your Student Loan Debt Before You Borrow

Getting a college degree can open the door to a world of opportunities. But seriously, who wants to graduate school with a mountain of student loan debt? Sure, student loan lenders are flexible and allow at least 10 years to repay the debt. However, depending on how much you owe upon graduation, student debt payments can cut into your disposable income, making it harder to purchase a home, an automobile or build a financial nest egg.

Although the thought of a student loan may leave a bad taste in your mouth, this may be your only way to a degree. But you don’t have to fear a student loan. There is a way to keep your debt manageable and avoid payment shock. It’s all about estimating your student loan debt before you borrow.

1. How much is each per credit hour?

To estimate your student loan debt, you have to know the cost of each credit hour. Each credit hour represents an hour of actual instruction. Therefore, a course with three credits is approximately three hours of lecture each week. The cost per credit varies depending on the college or university of your choice. For example, an undergraduate degree at an in-state college or university may cost $300 per credit, whereas an out-of-state school charges $600 per credit. For each school on your list, contact the Admission’s department and ask about tuition and fees for graduate and undergraduate programs.

But the costs don’t stop here. If you plan to live on campus, you will also need pricing information for room and board, as your student loan can help cover these expenses.

2. How many credits does your degree require?

Once you know the cost of each credit hour, determine how many credit you’ll need to complete your degree program. Your total student loan debt will depend on whether you’re working towards an undergraduate degree, a graduate degree or both. Completion of a Bachelor’s degree typically requires a minimum of 120 credit hours. For a Master’s degree or Ph.D, you will need to complete an additional 30 to 72 hours, depending on the program.

3. What is the interest rate on your student loan?

Interest rates vary by student loan lender. For example, if you’re applying for an unsubsidized Direct Loan, you’ll pay an interest rate of 6.8%. On the other hand, if you’re a professional degree student with a PLUS loan, the current interest rate on these loans is 7.9%. Student loan repayment doesn’t start until after you graduate, but interest will accrue while you’re in school. For this matter, estimating your student loan debt requires rate information.

Once you know the cost per credit at your chosen university, the number of credit hours you’ll need to complete your degree program, plus any room and board fees, you will have all the information needed to estimate your student loan debt. For the most accurate estimate, use an online student loan calculator. These calculators not only estimate how much you will owe based on your interest rate, they can also estimate your student loan payment after graduation based on your balance and loan term.