<p>We didn't take a loan for Freshman Fall semester to pay tuition, room and board.
Trying to do some planning ahead. If we apply for the loan towards the end of Spring semester, will we get the full $5,500 or just half? Either we or he will pay the interest that accrues on the loan. Then use that $5,500 towards Fall sophomore year. Repeat the same plan the following year. Will this work or is this a bad idea?</p>
<p>We want our son to pay at least a years worth of college (or in our case, the max he is able to loan under his name) while we cover the rest. As far as I understand it, if we don't take the student loan for each year we lose that option. Basically it's a use it or lose it policy, right? I want these loans under his name. </p>
<p>Stafford loans will be in his name. It is ‘take it or lose it’ as far as Stafford loans go for each year.</p>
<p>If he qualifies for subsidized loans (all or part of $3500 freshman year, $4500 sophomore, etc) then it doesn’t really matter when you take that portion of the loan as interest won’t be his responsibility until he graduates. If he doesn’t qualify for subsidized loans, you’ll have to determine if it is a smart move to have $5500 sitting in a bank account that he is earning 0.1% on but costing him ~4.5% on in interest.</p>
<p>Yes, it is a use it or lose it policy. And you can take out the full amount of the loan second semester. Do keep in mind that some students take more than 4 years to get through college, </p>
<p>The rate is 4.66% of the undergraduate stafford loans. If you are borrowing and unsubsidized loan, the interest begins to accrue at a simple daily rate the first day the loan is disbursed. </p>