Question

Suppose you have just graduated with $25,000 in student loan debt at 8% annual interest, compounded monthly. You make monthly payments over the next 10 years to pay off the loan. A. Find your monthly payment. B. How much money, in total, will you end up paying by the time the loan is paid off? C. How much did you pay in interest alone? D. What is the apy on this loan? What does the apy tell you?

Answer 1

College is supposed to be fun, right? Hollywood sure thinks so: in movies like Old School, Legally Blonde and Accepted, it’s one-half wild parties, one-half intellectual and emotional discovery. But that’s Hollywood—the schools themselves paint a different, but equally attractive picture. Open any admissions office pamphlet and you’ll find students lounging cheerfully in grassy campus spaces; friendly, approachable professors chatting with small clusters of adoring undergrads; clean, peaceful dormitories; and constantly perfect weather.