<p>can anyone tell me the difference among:
Federal Direct Subsidized Loan
Federal Direct PLUS
Federal Direct PLUS - Optional</p>
<p>Also wouldn't it better to just pay the tuition myself rather than loan some money? so that I wouldn't have to worry about debt, because the interest rate is so high(about 8% I think).
UC tuition is about $20,000 and I got $5000 grant, so I only need to pay $15000.</p>
<p>If you have the money, pay the money. It is much better than taking out a loan! The current interest rates are between 2.27% and 4.17%, but they're expected to go up this year.</p>
<p>The amount you can borrow in subsidized and unsubsidized Federal Direct (Stafford) loans (yes, both) is capped every year. As a regular 1st-year (not an independent student), you can only take out $2,625. As a second year, you can take out $3,500, and as a third and fourth year you can take out $5,500 each year. You are only allowed a total of $23,000 in Stafford loans during undergrad, but the upper limit may be tuition -- you can only take out as much as is required by the school, UP TO the previous amounts.</p>
<p>The PLUS loan is "independent" (it's offered by the Collegeboard, as well as SallieMae and other lenders), but is also directly tied to the cost of attending the school (meaning that it's also an education loan, and can't be used for anything else). It is a loan in your parents' name (as opposed to the Staffords, which are in <em>your</em> name) that can be borrowed up to the remaining cost (what's not covered by your financial aid -- yes, this means you can borrow what you owe in EFC!) of attending the school. </p>
<p>Repayment options get complicated. Stafford loans (the federal subsidized and unsubsidized) are graced until 6 months after you graduate, and there are a variety of deferrments you can get under extenuating circumstances. They usually put you on a 10-year plan by default, and the online loan consultant (dlssonline.com) will tell you what you can expect to pay per month, what the total repayment will be, and how much of that is interest. You can alter the options to things like Extended (which gives you 12-30 years instead of 10), Graduated (low payments that slowly increase per month, for 12-30 years), and Income Contingent (monthly payments based on your and your spouse's annual income). The cheapest repayment is the 10-year, automatical withdrawal.</p>
<p>The PLUS loan (and I believe the "optional" is the same as the other, except I guess they must be "forcing" you to take out a certain amount in PLUS) begins repayment 60 days after the last disbursement of the academic year (ie, if you finish school on May 1st, repayment for the year begins June 30), and follows the same schedule (10 year repayment, etc.) as the Stafford does. </p>
<p>I think that both loans lack a prepayment penalty (I know for sure the PLUS loan doesn't have one), which is excellent if you decide to start repaying early or in lump sums.</p>
<p>Hope this helps! Loans are confusing.</p>
<p>Thanks undecided,
that sounds so complcated and confusing...I guess I'll just pay the tuition myself</p>
<p>If you have the money, paying tuition directly is MUCH, MUCH preferred. You'll save money in the long run, too, by paying up front, plus you won't have to worry for 10-30 years about making payments on your loan, when you should be worrying about, say, house and car payments. ;)</p>
<p>I was offered:
Federal Direct Subsidized Loan $2,625.00<br>
Federal Direct PLUS $4,377.00<br>
Federal Direct PLUS - Optional $8,823.00</p>
<p>If I decide to borrow around $5000, which loan(s) would you recommend? which one has the least interest?
all these financial aid things are really confusing</p>
<p>bump. which one has less interest rate: subsidized or PLUS loan?</p>
<p>
</p>
<p>The subsidized is the lower interest rate because, well, it's subsidized.</p>
<p>Take everything out in the subsidized (you pay that back starting 6 months after graduating) and the rest in PLUS (you pay that back starting 60 days after the final disbursement -- ie, right after you get the last money of the school year, you get two months before you start paying it back).</p>