When creating a budget to repay your student loans, you should plan to pay back _____.

• A. the full loan balance in a single payment
• B. whatever amount you have left after other expenses
• C. only the interest accrued each year
• D. at least the minimum required payment each month

Answer: (D)

Verified step by step guidance

1. Understand the concept of student loan repayment: Student loans typically require borrowers to make monthly payments that include both principal and interest. The minimum required payment is the amount set by the lender that must be paid each month to avoid penalties or default.
2. Identify the options provided in the question: The options include paying the full loan balance in a single payment, paying whatever amount is left after other expenses, paying only the interest accrued each year, or paying at least the minimum required payment each month.
3. Evaluate each option: Paying the full loan balance in a single payment is unrealistic for most borrowers. Paying whatever amount is left after other expenses may lead to missed payments or penalties. Paying only the interest accrued each year does not reduce the principal balance, prolonging the repayment period.
4. Recognize the importance of the minimum required payment: Making at least the minimum required payment each month ensures that you stay on track with your repayment plan, avoid penalties, and gradually reduce the loan balance over time.
5. Conclude that the correct approach is to plan to pay at least the minimum required payment each month, as this is the responsible and practical way to manage student loan repayment.