loan questions

[paceman]

I'm new to applying for loans. Can anyone tell me the difference between a subsidized and unsubsidized Stafford Loan?

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[Khenon]

I'm new to applying for loans. Can anyone tell me the difference between a subsidized and unsubsidized Stafford Loan?

Subsidized loans do not accrue interest while you're in school (during loan deferment). Unsubsidized loans do accrue interest regardless of your status as a student, and/or if your loans are in deferment/forbearance. Both types of loans accrue interest during repayment.

 

[fleur delacour]

Okay, if unsubsidized loans also accrue interest, then what is the difference between unsubsidized and private loans? Why does everyone ask us to max out unsubsidized loans before taking any private loans?

 

[Stroganoff]

Okay, if unsubsidized loans also accrue interest, then what is the difference between unsubsidized and private loans? Why does everyone ask us to max out unsubsidized loans before taking any private loans?

Private loans often have higher interest rates than say an unsubsidized Stafford. Also, depending on the lender, private loans may be more strict about repayment or deferment/forbearance. Uncle Sam's pretty good for loans.

 

[angel80]

Also, don't forget the Perkins loans. They are especially attractive now that the Staffords are fixed at 6.8% interest. The Perkins loan is fixed at 5% interest, is subsidized while in school, and has a 9 month grace period (as opposed to 6 for the Stafford). If you qualify (based on financial need), you can get up to $6,000 a year through the Perkins program. The Perkins loans are distributed through your school, so you have to fill out an institutional application form through the school. You also must include your parent's info on the FAFSA.

 

[Burke]

I'm new to applying for loans. Can anyone tell me the difference between a subsidized and unsubsidized Stafford Loan?

The govt pays the interest on a subsidized loan. They continue to pay interest during enrollment, grace, and repayment. If your loan goes into deferment, then the govt will continue to pay the interest too.

You are responsible to pay interest on an unsubsidized loan. You can either pay it during school, or let it capitalize.

Private Loans typically have higher interest rates. They are a great option if you're looking to dig yourself out of a deep hole of debt after graduation.

 

[Mr. Freeze]

If you do maximize the unsub, to figure out what the principal will be when you grad, is that just [30K x (1+interest rate) ^ 4 years] + the same for 3 yrs + etc, for a grand total of 141800ish? And then that is the principal they figure your payment and interest schedule on for residency and so on?

How the hell do people pay interest when they're in school?? I thought I'd try, but I was doing my math wrong...