document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=951972>Question 951972</A>: <I><SPAN STYLE=\"word-break: break-all;\"> jimmy takes out a student loan for $25000 at a 5.2% interest rate. jim will be in school for 4 years and does not need to start paying the loan until graduation, but continues to collect interest. after 2 years and 6 months jim decides to make a partial payment of 2500 what is the interest and amount credited to the principal </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #581431 by </B><A HREF=/tutors/aboutme.mpl?userid=JulietG><B>JulietG(1812)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=JulietG><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=JulietG><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=581431\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Jim is an idiot.  Taking out that sort of student loan in this economy is stupid.  Additionally, if he took out a government student loan, that $2500 goes to the interest, not the principal -- even if he pays it early.<BR>\n" );
document.write( "<br><BR>\n" );
document.write( "Let's assume, though, that he was a little smarter and it's a private loan, and that the interest is straight rather than compounded daily.<BR>\n" );
document.write( "He'll owe $1300 in interest THE FIRST YEAR. (25000*.052)<BR>\n" );
document.write( "The second year, he'll owe .052 * 26300 = 1367.60 + 26300 = 27667.60<BR>\n" );
document.write( "Assuming the interest doesn't compound until the end of the year, he pays off 2500 at year 2.5.  27667.60-2500 = 25167.60<BR>\n" );
document.write( "<br><BR>\n" );
document.write( "The truth -- interest compounds daily on a student loan.  Compounded daily, the interest on a 25000 loan at 5.2% after 2 and a half years:<BR>\n" );
document.write( "28,470.71 total<BR>\n" );
document.write( "3,470.71 in interest<BR>\n" );
document.write( "His 2500 payment doesn't touch the principal.  It just reduces the interest, which is compounding with the principal.<BR>\n" );
document.write( "<br><BR>\n" );
document.write( "Get your first two years at a community college.  Get the grades for an honor society that offers scholarships. (http://ptk.org is one)<br><BR>\n" );
document.write( "Students loans are slavery.<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );