Stafford Loan---Lowest Payments Possible

[akwho]

A little bit about myself... I am attempting to reduce interest payments to the glorious republic of sallie mae since it directly comes out of my housing/beer fund.

Scenario:
Undergraduate: Zero debt

Medical School: Expected costs for everything...

Year I: $29,000
Year II: $49,000
Year III: $66,000
Year IV: $66,000
Total costs = $210,000
**Family help for medical school = $20,000

My understanding is you are allowed to take out Stafford loans in the following manner at 6.8% interest...
Year I: $42,000, Year II: $47,000, Year III: $42,000, Year IV: $47,000

Questions:
1. Would it be better to to use my family's resources upfront to pay off the first year in almost whole and avoid interest payments for as long as possible, or spread out the family money over four years in order to only take out Stafford loans and avoid taking Grad+ loans with higher interest (7.9%)? A third option would be to use the family money to only pay off interest on the loans so it doesn't capitalize ever. Which is best?

2. Do Stafford loans capitalize at the end of four years of medical school, or do they capitalize annually?

If you've made it this far in the post thanks for the read... here's your reward
----> http://www.youtube.com/watch?v=FIfbghHdG1s

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[ModusPwnens]

Ha! I just posted that same video. Thoroughly enjoying it at the moment. Cheerleaders plus my guilty pleasure summer jam.

Stafford loans are unsubsidized, which means they start accruing interest the moment you recieve the money. It seems like you would save money if you could tap into personal funds first, and pull out loans as late as possible.

 

[Bojack Horseman]

Stafford loans are unsubsidized, which means they start accruing interest the moment you recieve the money. It seems like you would save money if you could tap into personal funds first, and pull out loans as late as possible.

unless the interest go up...

 

[calvnandhobbs68]

unless the interest go up...

Which is fairly unlikely it'd happen in one year considering Stafford interest rates have been constant for six years.

 

[akwho]

Which is fairly unlikely it'd happen in one year considering Stafford interest rates have been constant for six years.

Cool thanks for the info.

Does anyone know the answer to the question of; Do loans capitalize annually or only at the end of four years?

 

[Dr McSexy]

I'm 90% sure that it's capitalized when ever you start making payments back to your loan (so 4 years then, unless you take longer). That is unless Great Lakes is lying to me, .

I'm pretty sure that applies to all of the federal stafford loans. I still have a couple stafford loans from undergrad that are accruing interest, but haven't yet capitalized.