Experts recommend that your student loan payments not exceed 8% of your first-year income. Many studies have also concluded that 8% is the appropriate amount. Most mortgage lenders do not permit more than 8% of your income for student loans in order to buy a house based upon their experience. If you share income and expenses with a spouse, then it is 8% of your household income.

The SLOPE calculator can determine the percentage of student loans to income for you. SLOPE (Student Loans Over Projected Earnings) is the formula to determine the percentage. In other words, it is the amount of your student loan payments divided by your projected first-year earnings or income. SLOPE also has a budget worksheet to help you plan your future income and expenses after you graduate.

The SLOPE calculator is actually several calculators in one. SLOPE determines:

• How much interest would be capitalized on unsubsidized Stafford Loans (if you do not pay the interest while you are in school or during your grace period).
• How much your monthly payment amounts would be (after adding in capitalized interest).
• What percent of your income is taken up by student loan payments, based upon your career choice.

SLOPE is also fun! Your results are presented on a graph which represents the percent of student loans to projected earnings over time. As your income increases, student loans represent a lower percentage. When you pay off your loans, the percent is zero. On a graph, this is a downhill slope! We have skiers on the slope. If you're a skier then you know there are green, blue, and black slopes in the trail guide.

• Green is for comfortable skiing.
• Blue is for intermediate skiers with good skills.
• Black is for advanced skiers who like to take risks!

Your results will also be on green, blue, and black slopes. You want to be on the green slopes.

• You choose your career from over 20 occupational categories in a dropdown box. After choosing your category, pick the specific career from a new dropdown box. Entry-level salaries are displayed with each career. The salaries are specific to Mississippi.
• You enter each loan you plan to borrow by academic year and grade level. This will take a little planning. There is a chart with loan limits to help you. You also need to estimate the dates you will start school and plan to graduate (for calculating capitalized interest).
• You may change the interest rate, loan term (years for repayment), and minimum monthly payments that are already entered. We used the maximum interest rate, standard loan term, and minimum payment requirements for new loans. We estimated them for private alternative loans.
• You can see how much you can save on interest if you shorten the loan term or raise the minimum payments (you may have to run SLOPE with the defaults first to see what the loan term and payment amount would ordinarily be). You can also see how much lower your payments will be if you choose to pay interest on an unsubsidized Stafford Loan while you are in school and during your grace period.

Ready to go skiing?

Start the SLOPE Calculator



Recent Repayment Studies: Susan P. Choy, U.S. Department of Education, National Center for Education Statistics, Debt Burden Four Years after College, August 2000. Patricia M. Scherscel, USAGroup Foundation New Agenda Series, Student Indebtedness: Are Borrowers Pushing the Limits? November 1998.

Salary Statistics: U.S. Department of Labor, 2001 Occupational Employment and Wage Estimates.

The SLOPE Calculator was developed by the Colorado Student Loan Program, and this web-based version initially appeared on the ColoradoMentor website. The SLOPE Calculator is presented here with the permission of the Colorado Student Loan Program.