Question

James is looking at attending SMU for a degree in Legal Studies. The tuition and room and board charges (plus books and other expenses) for one year will be $64,397.

James does not have this money. He needs a student loan. A Federal Direct Standard Loan has a repayment period of 10 years with an interest rate of 5%.


What will James’ monthly payment be?


Over the life of the loan, how much more than the tuition and room and board charges will James have paid his lender?

Answer 1

Monthly payment = $268.32

Over the 10 years interest

= $32198.4

Explanation:

According to the question

James will be paying his interest on a monthly basis.

So let's calculate how much the interest of a month it's going to be become with

P = 64397

R = 5

T =1/12

I = (64397*5*(1/12))/100

I = 321985*(1/12)/100

I = 26832.08333/100

I = 268.32

I = $268.32

So he will be paying$ 268.32 every month for 10 years

But in 10 years we have 10*12= 120 months

So total interest = 120*268.32

= $32198.4