Scenario 1 Amount borrowed $20,000 Date borrowed August 2022 APR 4 Loan type Subsidized Stafford Loan Graduation date May 2026 Deferment Forgiveness None Monthly payment $200 Monthly interest $67 Scenario 2 Amount borrowed $30,000 Date borrowed January 2020 APR 6 Loan type Unsubsidized Stafford Loan Graduation date December 2023 Deferment Forgiveness None Monthly payment $350 Monthly interest $150 Scenario 3 Amount borrowed $50,000 Date borrowed June 2023 APR 7 Loan type PLUS Loan Graduation date May 2027 Deferment Forgiveness None Monthly payment $500 Monthly interest $292 Scenario 4 Amount borrowed $10,000 Date borrowed September 2021 APR 5 Loan type Private Loan Graduation date August 2025 Deferment Forgiveness None Monthly payment $150 Monthly interest $42 Scenario 5 Amount borrowed $100,000 Date borrowed February 2022 APR 8 Loan type PLUS Loan Graduation date January 2026 Deferment Forgiveness Deferment for first 6 months after graduation Monthly payment $1,000 Monthly interest $667 Scenario 6 Amount borrowed $25,000 Date borrowed May 2020 APR 3 Loan type Subsidized Stafford Loan Graduation date April 2024 Deferment Forgiveness Forgiveness through Public Service Loan Forgiveness program after 10 years of working in a qualifying public service job Monthly payment $200 Monthly interest $63 For each of the 6 scenarios, compute the amount of money that the student will owe when they start paying back the loan (after graduation, or after deferment forbearance) If the loan is subsidized, this will be the same as the amount they borrowed For all other loans, you will need to use the compound interest formula from class assume that the interest is compounded daily Show your calculations Which student owes the most when they graduate Was this the same student who borrowed the most money originally Now we will begin paying off our loans For each student, use the payout annuity loan formula to find how long it will take them to pay off their student loan if they make the monthly payment you described above Which loan takes the longest to pay off Which one is paid off quickest Why do you think this is For each of your scenarios, re do Problem 5, but double the amount that you pay back each month How does this change the amount of time that it takes you to repay your loans (and don't just answer that you pay them back faster how much faster ) One other option which is available after graduation when your credit score is better is to refinance your student loans at a lower rate For each of your 6 scenarios, choose a lower interest rate and see how long it would take for the student to pay back their loan if they were able to refinance for that interest rate Which students benefit the most from refinancing Explain why you think this is the case Student loan debt has been steadily rising for years and is widely recognized as a problem Graduates with high student loan debt may struggle to pay bills, buy homes, or be successful in their career Because of this, many politicians have proposed plans to change the way that student loans in the United States work Research at least three proposals for student loan reform (be sure to cite your sources) For each proposal, describe the plan and how it would affect the 6 students you discussed in your scenarios

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 26, 2024

Scenario 1: Amount borrowed: $20,000 Date borrowed: August 2022 APR: 4% Loan type: Subsidized Stafford Loan Graduation date: May 2026 Deferment/Forgiveness: None Monthly payment: $200

Scenario 1: Amount borrowed: $20,000

Date borrowed: August 2022

APR: 4%

Loan type: Subsidized Stafford Loan

Graduation date: May 2026

Deferment/Forgiveness: None

Monthly payment: $200

Monthly interest: $67

Scenario 2: Amount borrowed: $30,000

Date borrowed: January 2020

APR: 6%

Loan type: Unsubsidized Stafford Loan

Graduation date: December 2023

Deferment/Forgiveness: None

Monthly payment: $350

Monthly interest: $150

Scenario 3: Amount borrowed: $50,000

Date borrowed: June 2023

APR: 7%

Loan type: PLUS Loan

Graduation date: May 2027

Deferment/Forgiveness: None

Monthly payment: $500

Monthly interest: $292

Scenario 4: Amount borrowed: $10,000

Date borrowed: September 2021

APR: 5%

Loan type: Private Loan Graduation

date: August 2025 Deferment/Forgiveness: None

Monthly payment: $150

Monthly interest: $42

Scenario 5: Amount borrowed: $100,000

Date borrowed: February 2022

APR: 8%

Loan type: PLUS Loan Graduation

date: January 2026

Deferment/Forgiveness: Deferment for first 6 months after graduation

Monthly payment: $1,000

Monthly interest: $667

Scenario 6: Amount borrowed: $25,000

Date borrowed: May 2020

APR: 3%

Loan type: Subsidized Stafford Loan

Graduation date: April 2024

Deferment/Forgiveness: Forgiveness through Public Service Loan Forgiveness program after 10 years of working in a qualifying public service job

Monthly payment: $200

Monthly interest: $63

For each of the 6 scenarios, compute the amount of money that the student will owe when they start paying back the loan (after graduation, or after deferment/forbearance).If the loan is subsidized, this will be the same as the amount they borrowed. For all other loans, you will need to use the compound interest formula from class - assume that the interest is compounded daily. Show your calculations. Which student owes the most when they graduate? Was this the same student who borrowed the most money originally?
Now we will begin paying off our loans. For each student, use the payout annuity/loan formula to find how long it will take them to pay off their student loan if they make the monthly payment you described above. Which loan takes the longest to pay off? Which one is paid off quickest? Why do you think this is?
For each of your scenarios, re-do Problem 5, but double the amount that you pay back each month.How does this change the amount of time that it takes you to repay your loans (and don't just answer that you pay them back faster - how much faster?).
One other option which is available after graduation - when your credit score is better - is torefinanceyour student loans at a lower rate. For each of your 6 scenarios, choose a lower interest rate and see how long it would take for the student to pay back their loan if they were able to refinance for that interest rate. Which students benefit the most from refinancing? Explain why you think this is the case.
Student loan debt has been steadily rising for years and is widely recognized as a problem.Graduates with high student loan debt may struggle to pay bills, buy homes, or be successful in their career.Because of this, many politicians have proposed plans to change the way that student loans in the United States work.Research at least three proposals for student loan reform (be sure to cite your sources). For each proposal, describe the plan and how it would affect the 6 students you discussed in your scenarios.