Can you explain the interest rate, was that 7-8% of the specific loan you took out for the semester or for the year? And is that 7-8% every month?
Week? Thank you very much for the info!
You apply for a student loan once a year. You (your school really) receives the loan prior to each semester. 7-8% interest starts to accumulate after you receive each loan.
Let's say you have 3 semesters in 2021 starting Jan, June, Sept:
-You get loan #1 in Jan and your interest starts to accumulate; it will continue to accumulate until you pay it off completely.
-You get loan #2 in June and your interest starts to accumulate; it will continue to accumulate until you pay it off completely.
-You get loan #3 in Sept and your interest starts to accumulate; it will continue to accumulate until you pay it off completely.
The same process will continue for 2022 and 2023 until you graduate.
7-8% is annual interest, but it accumulates. Google loan interest accumulation to understand better how it works.
To oversimplify:
If you borrow $100 at 10% annual, you will owe $110 (extra $10 = 10% of $100) in 1 year.
In 2 years, you will owe $121 (= $110 from year 1 + 10% from $110 for year 2).
In 3 years, you will owe $132.1 ( = $121 from year 2 + 10% from $121 for year 3).
etc.
When you are applying for your student loan, there is usually an automatic calculator that provides you with the specific numbers that will show how much you will owe in 1,5,10, etc years.
