Assume Jane got a loan for the full amount from Step 6, from part 1 on day 1 of college. Jane used an unsubsidized loan to finance her education and made no payments while she was in school. She secured a
loan at 6% APR compounded monthly. Since unsubsidized loans accrue interest while in forbearance, how
much will she owe when she starts making payments in 4 years, when she finishes college?

1) What interest/growth formula will you use?

2) Identify all variables:
P =
r =
n =
t =

3) fill in your formula from step 1 with your values in step (2):_

4) how much will she owe in 4 years, when she graduates and starts making payments? use your equation from step (3). round to the nearest cent.

Assume Jane had, instead, secured a loan for 5.75% APR compounded continuously while she was in
college. How much would she owe at the end of college if this were true?

5) What interest/growth formula will you use?

6) Identify all variables:
P =
r =
t =

7) Fill in your formula from step (5) with your values from step (2):

8) How much will she owe in 4 years, when she graduates and starts making payments? Use your
equation from step (7). Round to the nearest cent.

9) Which loan would result in lower interest accrued while Jane is in school?
a. 6% compounded monthly
b. 5.75% compounded continuously


From this point forward, use your interest terms and loan balance from either step (4) or step (8),
depending on which loan terms you determined would result in less interest charges for Jane.

If Jane plans to pay off her loan over the course of 10 years, from the day she graduates, using the loan terms and
balance from step (9), how much will Jane actually be paying for her college education?
10)

11)After college, Jane plans to be a computer programming teacher. According to this website, the
estimated, average annual salary for this job is $59,980.

Over the span of the 10 years she’ll be paying off principal and interest, how much money will be
left of her yearly salary?