Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Teach Me

How to Manage Student Loan Debt

June 10, 2019

Tip of the Week

If you have student loan debt, make sure you pay off a portion of your principal each month.

1 min read

Student Loan Debt Repayment Strategies:

Jargon Hack

What is principal?


Principal is the original amount that you borrow on a loan. It’s different from interest, which is a percentage charged annually and added to the principal.

Find out


Principal is the original amount that you borrowed on your loan. It’s different from interest, which is a percentage charged annually and added to the principal. (Special note: Principal can also be a sum of money that you save or invest, on which you earn interest.)

Example: Say you borrow $30,000, with an interest rate of 5%. The principal of the loan is $30,000. The interest rate is 5%, and your loan will accumulate interest charges on a daily basis.

To calculate your daily interest, divide the interest rate by the number of days in a year: 0.05/365=0.000136986.

Then multiply that number by your outstanding balance: 30,000 x 0.000136986=4.1. (So, $4.10 is approximately how much interest you owe per day.)

Next, multiply that amount by the number of days in the month: 4.1 x 30=123, or $123. That’s roughly how much interest you will owe each month.

If you had the option of making minimum payments of $123 per month, you’d only be paying interest and not paying down any of the $30,000 of principal. To pay off your loan with interest  in ten years, you’d have to pay $308 per month, according to the federal student lender Sallie Mae.

Good to know: As you pay off your principal, the dollar amount of interest you owe will also decrease each month. (You can see how that works with this calculator.)

Welcome to your new financial home.

Start today with as little as $5.

Get the App

Investing is better with friends.

Every successful referral gets you $5.

Get my $5

Investing is better with friends.

Every successful referral gets you $5.

Get my $5

By Stash Team

Next for you
How to Manage Credit Card Spending

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
Retirement politics Careers social media budgeting

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.