loan calculation question

[moooooo]

hey guys, I have a question about how to approach interest/capitalization on stafford unsub loans.

would it be better to take out a fixed amount of loans (say 10,000 per year for easy math) and use savings to pay off the interest before it gets capitalized
OR
would it be better to just take out loans (minus the savings I would use to pay off interest in the above scenario) but allow for capitalization?

the interest rate is 5.41% and i believe the interest is calculated daily, though i'm not sure how often it is capitalized (yearly is what i saw on the forum but nothing on the government website). could someone with more financial savvy to do the math, or tell me how to do it for how much both of those scenarios will be upon graduation after 4 yrs?

scenario 1 is easy, I would end up with 40,000 in loans upon graduation, but how much interest did I have to pay down over those 4 years? and scenario 2 i have no idea on

thanks!

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[NDPitch]

It would be wise to take the loans, and pay down interest when financially able to do so during school. Who is to say that you won't get in a car accident during school, and would need some savings to help you out with medical bills? You don't want to be using loan money for emergencies, or have to take out even more loans to get you through a bad situation.

It is always a good thing to have your savings to fall back on in times of emergency. This way, you can pay down some of the interest before capitalization here and there as you see fit, and still have some of your "real money" that you've saved in the bank.

 

[andyO4you]

if you have a loan of $40k and you have to repay it in 10 years you will have Monthly payments: $432.32 ~ Total interest paid over the life of the loan: $12K

if you take a 20 year loan the payments monthly are lowered at 280 but interest over those 20 year becomes more than $20k.

If you take a 5 year plan then you will pay around $5k only in interest and almost $800 a month.

My advice, if you have the money pay it faster! if you want to know how much is that for $80k debt is answer x 2 duh! or x3 if the loan will be 40x3=120k