I have an outstanding student loan(remember guys?) for $24,500. I have now graduated and landed a good-paying job. I pay $318.20 per month at a rate of 5% APR. If I want to bring it down to half of its current balance, or $12,250, in three years' time, by how much would I have to increase my monthly payments to reach my goal? Can anybody help? Thank you very much.

Guest Dec 4, 2018

#1**+2 **

OK...I figured this out a few minutes ago ignore MOST of my previous gyrations.... I see someone has posted the answer below....BUT here is the SAME equal series payment formula that applies as I used before... What you need to think of this as: you are paying off the 12250 @ 5% in 36 months AND you have to continue paying the 5% interest on the OTHER 12250 per month as you go.....so

A = P (1+i)^n [ i/((1+i)^n -1)] n = 3 x12 = 36 i = 5%/12 = .0041667

A = P ( .029970897)

A =12250(.016104933) = $367.14349

PLUS the monthly interest on the OTHER 12250

12250 (.05/12) = $ 51.0416

= 418.185 =~ 418.19 per month for an increase in your monthly payment of

418.19 - 318.20 = 99.99 essentially 100 more a month ! Ta Da!

Thanx Guest for your agreement! Whew! Glad I finally figured out the errors of my ways.....

ElectricPavlov Dec 4, 2018

edited by
ElectricPavlov
Dec 4, 2018

edited by ElectricPavlov Dec 4, 2018

edited by ElectricPavlov Dec 4, 2018

edited by ElectricPavlov Dec 4, 2018

edited by ElectricPavlov Dec 4, 2018

#2**+1 **

EP: Very good job. A couple of small quibbles: The original loan of $24,500 is NOT paid in six years, but, in fact, in 7 3/4 years. There is a rather complicated-looking formula to solve directly for the new payment:

**-P*[(1-(1+5/1200)^-36)/(5/1200)]-12250*(1+(5/1200))^-36+24500=0, solve for P or Payment. You will see that the new payment = $418.19 as you state in the amortization calculator.**

Guest Dec 4, 2018