Which student loan (A, B, or C) do you think has the lowest monthly payment?
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Loan C has the lowest monthly payment. Typically, the longer the term of the loan, the lower the monthly payments.
Which loan do you think has the highest monthly payment?
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Which loan do you think has the lowest total accumulated interest?
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Which loan do you think has the highest total accumulated interest?
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– Loan C has the highest total accumulated interest. Typically, the longer term loans will accumulate more interest.
Even though the interest rates on the longer term loans are lower, the interest on those loans capitalizes and balloons quickly. In fact, Loan C will accumulate nearly twice the interest as Loan A, even with a lower interest rate.
Which loan has the best conditions?
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Loan C has the best conditions. With a lower interest rate and an extended term, a person can pay off the loan 10 years early and save more on interest overall. Even if the borrower can afford the minimum monthly payment on Loan A, it’s better to choose a lower minimum and make extra payments each month. Note: Keep in mind that your situation isn’t likely to be as clear-cut as this example. You’ll need to weigh your priorities when selecting between two similar offers.