1. Student loan budgeting
Heather l horvath

2. hypothesis
With the rise of higher education costs today it is nearly impossible for an individual to pay cash or ‘out of pocket’ expenses to obtain an education for a degree in a field that they may choose as there life long career choice. It is important for an individual to think clearly and strategically about the goals they wish to achieve with their education as well as a workable budget. There are several Financial Aid programs such as scholarships and grants that can assist with the cost of higher education, however some of these programs generally do not cover full tuition costs. Another source that can be used to pay for higher education costs are student loans. Students should be as selective as possible when determining the right solution to fit their budget. Obtaining an Associates degree for Human Resource Specialist; costs $33,060 for tuition and fees along with a cost of $3,200 for books and other supplies, totaling $36,260 in student loans. With an interest rate of 3.86% and a monthly payment of $400 this student loan is expected to be paid off in 8 years versus the standard 10 years.

3. Human resource specialist aas - Total loan balance
The Human resources specialist degree program takes 2 years to complete. There are fifteen weeks in each semester. The total cost of this program are as follows:
Tuition and fees: $33,060
Books and Supplies: $3,200
Total cost = $36,260
In order to determine what the total cost is per semester you must first determine how many semesters there are in a 2 year period.
15 weeks per semester/52 weeks per year = 3.5 semesters per year x 2 years = 7 semesters to complete the degree program
If the total cost of the degree program costs $36,260 and there are 7 semesters what would the cost of each semester be for a full time student?
$36260 total cost/7 semesters = $5,180 cost per semester
(Bryant and Stratton student consumer information)

4. Student Loan Rates
Federal Student loan rates are determined by congress (federal student aid, n.d., who sets interest rates). Student loan rates disbursed between July 1, 2013 and June 30, 2014 is dependent on the type of student loan used. Typically, for an undergraduate whether it be a subsidized or unsubsidized loan the rate is currently fixed at 3.86%.

5. Calculating Simple Interest
Calculating simple interest is based only on the principle amount of a loan. This is typically not a true reflection of the amount in interest that one would pay back on a student loan as interest accrues daily based on the principle amount each day using a simple daily interest method. The formula to calculate simple interest is: Interest Amount = Principal x Annual Percentage Rate(APR) x Time(in years) or I = PRT I = $36,260 x x 10 I = $13,996.36

6. Simple daily interest method
Interest on student loans is typically accumulated using a simple daily interest formula (federal student aid, n.d., How is interest calculated): Interest = Outstanding Principle x number of days since last payment x interest rate factor For example: Interest = 36,260 x 10 x = $38.32 has accrued in interest within a ten day period In order to determine what the Interest rate factor is, use the following formula (Balle, L , how to calculate an interest rate factor) : Loan interest rate/ %/ = / = A Loan Amortization schedule is typically used by the student loan servicer to calculate all of the above.

7. Loan Amortization
While completing the Loan Amortization Schedule and using the principal amount of $36,260 at an interest rate of 3.86% with a 10 year payback the monthly loan payment would be $
If you pay just the minimum payment for the 10 year loan period $7, will accrue in interest owed using the simple daily interest method.
This will result in a future value of $43, being owed on the loan.

8. Loan amortization including additional principle
Paying off your loan sooner is always a smart idea and better for your wallet in the long run.
If you add additional principal to your monthly payment to pay off your loan sooner by rounding your payment to $400 per month versus the minimum payment of $ you will save $ in accrued interest and pay your loan off in 8 years versus 10 years.
If you can budget more in your monthly finances it is highly recommended as you will save even more in interest and pay off your loan sooner than expected.

9. General Student loan information
Student loans are just like any other loan that need to be repaid or paid back. There is usually some flexibility with student loan repayment, however most follow the same standard repayment plan. Student loans typically do not require repayment until the student graduates, no longer attends college or drops below a half time student schedule. Standard repayment plans also have a fixed monthly payment amount and payments are based on a 10 year payback. Student loans are serviced by a loan servicer in which they will guide the student through the repayment process and keep the student updated with repayment options, payment amount, grace periods, etc. There are also options for extended repayment, deferment and forbearance as well as forgiveness, cancellation and discharge of student loans. In order to qualify or fall in to one of these categories specific guidelines or reasons have to be met (Federal student aid, N.d., understanding repayment). If a student does not make their payments they take the risk of becoming delinquent and defaulting on their student loan. This, of course, is not ideal as there are consequences that a student will face such as creating a negative credit rating making it difficult or impossible to borrow money again for a car, a house, interest rates will be much higher, and students may have trouble obtaining auto or home insurance, utilities, a cell phone, or renting an apartment. It is important to avoid default and have a plan in place to repay your loans. Paying your loans off sooner rather than later can save a student money with regard to interest being accrued and ultimately owing less (Federal student aid, N.d., understanding Default).

10. Human resource specialist salary
according to the Bureau of Labor Statistics Occupational Handbook (2014), the median wage for human resource specialists was $55,800 in May of 2012 while the lowest ten percent earned less than $33,000 (BLS, 2014, Pay Section, para. 1). An individual in this field of study would be able to afford these loan payment whether they receive the median wage or the lowest ten percent wage. Monthly Wage Earnings = annual salary/26 biweekly payments x 2 pay periods per month $33,000/26 x 2 = $ monthly wage earnings Deducting $400 budgeted for the monthly student loan payment there would be a remainder of $ left for other living expenses. Obviously the median would provide more flexibility with the loan payment as well as other living expenses.

11. conclusion
Following A simple plan by creating a budget and following that budget will ensure successful payback of your student loans. Only borrow what you can afford to payback. If you are able to pay additional principle on a monthly basis or as often as possible, this would be in your best interest as it will save you money on interest costs. When paying additional principle you will also be able to payoff your loan early; this is especially important if you have a loan that accrues interest from time of disbursement. if you are having trouble with your loan payments be sure to stay in contact with the loan servicer and make arrangements with them so that you are able to stay current on your loan and in good standing with your credit.

12. references
Balle, L. ( ). How to calculate an interest rate factor. The nest. Retrieved from: thenest.com Bryant and Stratton college. (2014). Degree: human resource specialist. Student consumer information for this program. Retrieved from: Bureau of Labor Statistics. (2014). Human Resource Specialists and Labor Relations Specialists. Occupational Outlook Handbook. ( ed.). Retrieved from bls.gov Federal Student Aid. (n.d.). An Office of the U.S. Department of Education. Retrieved from: