Educating borrowers about their loan repayment options
March 19, 2020
When it comes to borrowing money for some huge expense - whether it be for a house, a car, or college tuition - most of us want to know the monthly payment amounts.
After all, by knowing that monthly payment amount, we can quickly calculate if we can afford to borrow for that purchase (and still buy food and pay our rent or utilities).
College students borrowing money to pay tuition, however, face challenges when estimating the impact of student loans on their budget. In many cases, for example, they don't know what their future salary will be.
A new Loan Simulator tool, released recently by the Department of Education, addresses this issue somewhat by providing borrowers, according to the Feb. 21 Electronic Announcement, "more personalized information about their federal student loan repayment options."
The tool can pull a borrower's data from the National Student Loan Data System (NSLDS) and guide borrowers through a series of questions about their situation. The results will include repayment amount estimates and a repayment strategy that reflects the borrower's situation and eligibility.
The Department notes that the tool, which replaces the old Repayment Estimator tool, serves only as an estimate and is not a final eligibility determination or a final repayment amount.
While we would all like to know the exact payment amount, this tool will hopefully give student loan borrowers enough of a monthly payment estimate to plan for their future budget.