Need some insight!

[pacman8794]

Ok, so I got into grad school and now I need to figure out all this loan stuff. I had a scholarship for college so I didn't have to take out a loan, but now I need to and I have no idea what I'm doing. I think I will need about $35,000 a year and I'm going for two years. I think the $35,000 should cover tuition, books, etc. Also, I'm going to need about $200 a month just to commute to school b/c of transportation so I'm not sure if I can include that in my loan, but I think I can. Also, I'm trying to figure out what bank or lender would be good to take out the loan and when I should go to take it out before I run into any penalties or whatever. Also, how do I calculate how much interest will be added on after my two years of taking out the loan? I've read some stuff online and more specifically on this forum about loans and whatnot, but I'm still confused so any help you guys can give me would be much appreciated.

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[TMP-SMX]

I can see you are confused. It can seem overwhelming applying for financial aid for the first time.

First of all, have you filed your FAFSA? That will allow you to apply for stafford loans and grad plus loans from the federal government. Stafford loans for grad students are 6.8% and you are eligible for $20,500 total with $8500 of that being subsidized (meaning the interest is paid during school by the federal government). The remainder of that is unsubsidized meaning that there is interest on the principal amount (what you take out each semester) but it isn't capitalized (added to the principal AKA interest on interest) until you enter repayment after a six month grace period post-graduation. After you reach your $20,500 limit you can apply for grad plus loans at 8.5% up to your cost of attendance that is like a budget for you set by your school. If you find that your cost of attendance doesn't seem high enough for you you can talk it over with the financial aid office to see if you can work something out so that you can increase your CoA.

Also, what kind of school tuition/fees plus cost of living is $35k for graduate school? What are you studying? Are you able get research stipends, work as a TA, or tutor to get some money? That seems like a pretty steep amount so you are either in an expensive area or the tuition is very high.

 

[pacman8794]

I can see you are confused. It can seem overwhelming applying for financial aid for the first time.

First of all, have you filed your FAFSA? That will allow you to apply for stafford loans and grad plus loans from the federal government. Stafford loans for grad students are 6.8% and you are eligible for $20,500 total with $8500 of that being subsidized (meaning the interest is paid during school by the federal government). The remainder of that is unsubsidized meaning that there is interest on the principal amount (what you take out each semester) but it isn't capitalized (added to the principal AKA interest on interest) until you enter repayment after a six month grace period post-graduation. After you reach your $20,500 limit you can apply for grad plus loans at 8.5% up to your cost of attendance that is like a budget for you set by your school. If you find that your cost of attendance doesn't seem high enough for you you can talk it over with the financial aid office to see if you can work something out so that you can increase your CoA.

Also, what kind of school tuition/fees plus cost of living is $35k for graduate school? What are you studying? Are you able get research stipends, work as a TA, or tutor to get some money? That seems like a pretty steep amount so you are either in an expensive area or the tuition is very high.

i applied for FAFSA already so that's good. It's one of the top notch schools so tuition is high. I'm not sure if my numbers were exactly accurate. Tution is about $30,000 a year and I figure the extra $5000 would cover fees such as books and transportation. I'll be working part time so I'll have money, but I'd rather just save it up and then when I have to pay back my loan I'll have a head start on that. So, I'm curious now as to what the interest will be after I graduate. If I take out the full $20,500 and an extra $15,000 in grad plus loan for one year and then repeat that process for the second year then what would the loan amount be approximately?

 

[TMP-SMX]

Ouch 30k tuition for grad school is rough. Ok let me run the numbers for you.

Unsub staffords: $27,125 after your 6 mo grace period with $2,125 of that being interest
S1: 6250
S2: 6250+6250*0.068/2
S3: 6250+6250*0.068/2+6250*0.068/2
S4: 6250+6250*0.068/2+6250*0.068/2+6250*0.068/2
Repayment at 6mo: 6250*0.068/2+6250*0.068/2+6250*0.068/2+6250*0.068/2

Grad Plus: $33,187.50 with $3,187.50 being interest
S1: 7500
S2: 7500+7500*.085/2
S3: 7500+7500*.085/2+7500*.085/2
S4: 7500+7500*.085/2+7500*.085/2+7500*.085/2
Repayment at 6mo: 7500*.085/2+7500*.085/2+7500*.085/2+7500*.085/2

Sub Stafford: $17,000

So your total loan amount after your graduation and six month grace period is: $77,312.50 with $5,312.50 being interest. Also keep in mind that after that point the interest is going to compound whereas before it wasn't.

 

[pacman8794]

Ouch 30k tuition for grad school is rough. Ok let me run the numbers for you.

Unsub staffords: $27,125 after your 6 mo grace period with $2,125 of that being interest
S1: 6250
S2: 6250+6250*0.068/2
S3: 6250+6250*0.068/2+6250*0.068/2
S4: 6250+6250*0.068/2+6250*0.068/2+6250*0.068/2
Repayment at 6mo: 6250*0.068/2+6250*0.068/2+6250*0.068/2+6250*0.068/2

Grad Plus: $33,187.50 with $3,187.50 being interest
S1: 7500
S2: 7500+7500*.085/2
S3: 7500+7500*.085/2+7500*.085/2
S4: 7500+7500*.085/2+7500*.085/2+7500*.085/2
Repayment at 6mo: 7500*.085/2+7500*.085/2+7500*.085/2+7500*.085/2

Sub Stafford: $17,000

So your total loan amount after your graduation and six month grace period is: $77,312.50 with $5,312.50 being interest. Also keep in mind that after that point the interest is going to compound whereas before it wasn't.

thanks a lot, I appreciate it. One more question, When I pay back the loan what interest rate do I pay it back at? I'm assuming 6.8%, but I'm not sure.

 

[TMP-SMX]

thanks a lot, I appreciate it. One more question, When I pay back the loan what interest rate do I pay it back at? I'm assuming 6.8%, but I'm not sure.

Take a look here for an explanation of repayment plans.

Your Stafford Loans will all be gaining interest (subsidized included) at 6.8% give or take various incentives or fees and same for grad plus at 8.5%. What you have to pay depends on the payment plan you use. Obviously it is a good idea to be paying more than the interest is compounding each month. So a good estimate is that you'll be getting $250 interest on your staffords a month and $235 interest on your grad plus each month.

 

[pacman8794]

Take a look here for an explanation of repayment plans.

Your Stafford Loans will all be gaining interest (subsidized included) at 6.8% give or take various incentives or fees and same for grad plus at 8.5%. What you have to pay depends on the payment plan you use. Obviously it is a good idea to be paying more than the interest is compounding each month. So a good estimate is that you'll be getting $250 interest on your staffords a month and $235 interest on your grad plus each month.

I actually use that website quite often, lol. If I use this calculator: http://www.finaid.org/calculators/loanpayments.phtml and just enter the loan amount over a specific time period then is that accurate? For example, I entered 80,000 over a 25 year period and it came out to something like 555 per month at 6.8%

 

[TMP-SMX]

Well you had $44125 at 6.8% and $33187.50 at 8.5% coming to $77312 total. It comes out to $573.49 a month (split up between your staffords and grad plus) on a standard 25 year plan but you have to keep in mind that you should pay higher amounts if you can as you end up paying $91877 on the staffords and $80173 on your grad plus coming to $172050 over the life of the loan repayment with $94738 of that being interest (not including the interest during school or your grace period).