Post on 19-Dec-2015
How a Financial Calculator Can Help Teens Make Deci$ion$ about Student Loans
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Marsha A. Goetting Ph.D., CFP®, CFCSMarsha A. Goetting Ph.D., CFP®, CFCS
Professor & Extension Family Professor & Extension Family Economics SpecialistEconomics Specialist
Department of Agricultural Department of Agricultural Economics & EconomicsEconomics & Economics
Have you wondered? Have you wondered? • What the monthly What the monthly payments would be on payments would be on a student loan after a student loan after graduation?graduation?
Have you wondered? Have you wondered? • How much you would How much you would
save in interest charges if save in interest charges if you increased your you increased your payment?payment?
WorkshopWorkshop• You are going to learn how You are going to learn how
to solve these & similar to solve these & similar problems quickly & easily problems quickly & easily by using a by using a financial financial calculatorcalculator
Financial CalculatorFinancial Calculator
• Texas Instruments Texas Instruments BA-35 Solar Business BA-35 Solar Business AnalystAnalyst
• No longer availableNo longer available
IntroductionIntroduction• Getting Acquainted Getting Acquainted
with your Financial with your Financial CalculatorCalculator
Turn on Turn on
MODEMODE
CE/CCE/C
2nd2nd CPTCPT AC/ONAC/ON
NN
XX 12 12
% i% i PMTPMTPVPV FVFV
1212
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Financial Mode Financial Mode
FinFin 0. 0.
• If If FINFIN is not lower left is not lower left cornercorner
• PressPress MODEMODE AC/ONAC/ONCPTCPT
Decimal Function Decimal Function
FINFIN 0.00 0.00
• PressPress 2nd2nd
2nd2nd
FixFix
CPTCPT 22
Clearing Screen/DisplayClearing Screen/Display
• Press key oncePress key once Clears Display Clears Display Corrects Incorrect Corrects Incorrect
EntriesEntries Clears word “Error”Clears word “Error”
CE/CCE/C
Clearing Financial Registers Clearing Financial Registers • Press keyPress key Clears numbers in Clears numbers in
registers & displayregisters & display
NN %i%i PVPV PMTPMT FVFV
CE/C 2nd2nd
CMRCMR
CE/C
Finance KeysFinance KeysNN
% i% i
PMTPMT
Number of PeriodsNumber of Periods
Interest RateInterest Rate
Payment AmountPayment Amount
Finance KeysFinance KeysPVPV
FVFV
Present ValuePresent Value
Future ValueFuture Value
Compute keyCompute keyCPTCPT
Student LoansStudent Loans
Student LoansStudent Loans•CalculateCalculate
•PaymentsPayments
•Interest paidInterest paid
Student Loans Student Loans • Bernie’s Loan Bernie’s Loan $23,000$23,000
• APR APR 8.258.25%%
• 2020 years pay years pay
Student Loan $23,000 Student Loan $23,000 • Clear registers Clear registers 2nd CE/C CE/C2nd CE/C CE/C
• Loan amountLoan amount 23,000 PV23,000 PV
• Periods Periods 20 x 12 = 240 N20 x 12 = 240 N• % Rate% Rate 8.25 8.25 12 = 0.69 %i 12 = 0.69 %i
• CPT PMT 195.98 CPT PMT 195.98 (don’t clear)(don’t clear)
Interest Paid Interest Paid
• $195.98 payment$195.98 payment
• x 240 # monthsx 240 # months
$47,034.02 paid $47,034.02 paid
- 23,000.00 loan- 23,000.00 loan
Interest Paid Interest Paid
$24,034.02$24,034.02 interest paid interest paid by Bernie by Bernie over 20 yearsover 20 years
Student Loans Student Loans • John John $19,000 $19,000
• APR 8.25%APR 8.25%
• 15 year loan 15 year loan
Student Loans $19,000 Student Loans $19,000 • Clear registers Clear registers 2nd CE/C CE/C2nd CE/C CE/C• Loan AmountLoan Amount 19,000 PV19,000 PV
• Periods Periods 15 x 12 = 180 N15 x 12 = 180 N• % Rate % Rate 8.25 8.25 12 = 0.69 %i12 = 0.69 %i
• CPT PMT 184.33 CPT PMT 184.33 (don’t clear)(don’t clear)
Interest Paid Interest Paid
• $184.33 payment$184.33 payment
• x 180 # of periodsx 180 # of periods
$33,178.80 paid$33,178.80 paid
- 19,000.00 loan amount- 19,000.00 loan amount
Interest Paid Interest Paid • $14,178.80 interest $14,178.80 interest
paid by John over paid by John over 15 years15 years
SummarySummary
•CalculatedCalculated•PaymentsPayments
•Interest paidInterest paid
Student Loan Student Loan • Payment knownPayment known• How long to pay off How long to pay off
debt?debt?
Student Loans Student Loans • Red’s Loan Red’s Loan $23,965$23,965
• APR APR 8.258.25%%
• $250$250 payments payments
Student Loan Student Loan • Clear registers Clear registers 2nd CE/C CE/C2nd CE/C CE/C• Loan AmountLoan Amount 23,965 23,965 PVPV
• Payment Payment 250 PMT 250 PMT• % Rate% Rate 8.25 8.25 12 = 0.69 %i 12 = 0.69 %i • CPT NCPT N (months) (months) 157.04157.04
• 12 = 13.09 years 12 = 13.09 years ((don’t clear)don’t clear)
Compute interest paidCompute interest paid
• Press again: Press again:
• CPT N 157.04CPT N 157.04
• # of monthly # of monthly paymentspayments
Interest Paid Interest Paid
157.04 months157.04 months
x $250 paymentsx $250 payments
$ 39,260.99 paid back$ 39,260.99 paid back
- 23,965.00 - 23,965.00 loan amountloan amount
Interest Paid Interest Paid
• $15,295.99 interest $15,295.99 interest paid by Red over paid by Red over 13.09 years13.09 years
What if ??? What if ???
• Increase payment from Increase payment from $250$250 to to $350$350 ….just change ….just change the payment amount the payment amount
PMTPMT
Student Loan Student Loan • Clear registers Clear registers 2nd CE/C CE/C2nd CE/C CE/C• Loan AmountLoan Amount 23,965 23,965 PVPV
• Payment 350 PMTPayment 350 PMT• % Rate% Rate 8.25 8.25 12 = 0.69 %i 12 = 0.69 %i • CPT N (months) 92.87CPT N (months) 92.87
• 12 = 7.74 years 12 = 7.74 years (don’t clear)(don’t clear)
Interest Paid Interest Paid 92.87 months92.87 months
x $350 paymentsx $350 payments
$ 32,503.53 paid back$ 32,503.53 paid back
- 23,965.00 - 23,965.00 loan amountloan amount
Interest Paid Interest Paid
• $8,538.53 interest $8,538.53 interest paid paid by Red over by Red over 7.74 years7.74 years
The differenceThe difference• $250 13.09 yrs = $15,295.99$250 13.09 yrs = $15,295.99
• $350 7.74 yrs = $ 8,538.53$350 7.74 yrs = $ 8,538.53
$6,757.46$6,757.46
Central IdeaCentral Idea• By increasing the amount of By increasing the amount of
paymentpayment• A loan can be paid A loan can be paid
off sooner off sooner
• You pay less INTERE$TYou pay less INTERE$T
Student Loans Student Loans • Troy’s Loan Troy’s Loan $34,000$34,000
• APR APR 8.258.25%%
• $300$300 payments payments
Student Loan Student Loan • Clear registers Clear registers 2nd CE/C CE/C2nd CE/C CE/C• Loan AmountLoan Amount 34,000 34,000 PVPV
• Payment Payment 300 PMT 300 PMT• % Rate% Rate 8.25 8.25 12 = 0.69 %i 12 = 0.69 %i • CPT NCPT N (months) (months) 220.44220.4412 = 18.37 years 12 = 18.37 years (don’t clear)(don’t clear)
Compute interest paidCompute interest paid
• Press again: Press again:
• CPT N 220.44CPT N 220.44
• # of monthly # of monthly paymentspayments
Interest Paid Interest Paid 220.44 months220.44 months
x $300 paymentsx $300 payments
$ 66,132.34 paid back$ 66,132.34 paid back
- 34,000.00 loan - 34,000.00 loan
Interest Paid Interest Paid • $32,132.34 interest $32,132.34 interest paid by Troy over paid by Troy over 18.37 years18.37 years
Summary Summary • Student Loan Student Loan
Payment knownPayment known• Computed how long to Computed how long to
pay off debtpay off debt
• Interest paidInterest paid
How a Financial Calculator Can Help Teens Make Deci$ion$ about Student Loans
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