Section 8.4 Student Loans
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Example 8-4B
See It
Ignacio recently graduated from college and has a total student loan
amount of $16,245. His monthly payments will be $165.13. He will make those
payments for ten years. How much interest will Ignacio pay on his student loans
when they are completely paid off ?
Strategy
Use the formulas:
total amount owed = monthly payment × number of payments
amount of interest paid = total amount owed – principal
Solution
Step 1: Determine the number of payments Ignacio will make. Multiply the
length of his loans, in years, by 12.
number of payments = length of loans (years) × 12
number of payments = 10 × 12
number of payments = 120
Step 2: Determine the total amount of money that Ignacio will pay for his
student loans. Multiply his monthly payment by the number of payments.
total amount owed = monthly payment × number of payments
total amount owed = $165.13 × 120
total amount owed = $19,815.60
Step 3: Determine the amount of interest paid. Subtract the principal from the
total amount owed.
amount of interest paid = total amount owed – principal
amount of interest paid = $19,815.60 – $16,245
amount of interest paid = $3,570.60
Check It
Hansa recently graduated from college. She has a total student loan amount
of $21,379. Her monthly payments will be $196.73, and she will make those
payments for ten years. How much interest will Hansa have paid when her
student loans are paid in full?