If there's a simple answer to this, I'm gonna feel really dumb...

Paying for College
1

<p>Why is everyone so hesitant to take out private student loans? I'm going to be borrowing between $10k-$15k per year. From the research I've done (though not incredibly extensive), a lot of the loans have low interest rates (around 5.5%), allow students to defer payments until 6 months after graduation, and the estimated monthly payments seem really reasonable. Maybe I'm completely missing something, but it doesn't seem that bad or unmanageable, even with the amount of money I plan on borrowing.</p>

2

<p>Borrowing money for an education that will prepare you for a job that you have no guarantee of getting makes people nervous. In this day and age, it’s never a good thing to overwhelm your finances.</p>

<p>J <3</p>

3

<p>$15k/year is on the very high end of what is reasonable for most professions. With accrued interest you will end up owing ~$70k at graduation. The payment for that will be ~$750/month for 10 years. Assuming that you start out with $50-$60k in salary, a payment of $750/month will leave you with very, very little disposable income and will impact your ability to save for a house down payment, retirement, or just a nice vacation once in a while. It is manageable, but you will have to pay attention to what you spend and how you spend it.</p>

4

<p>The private student loans I have seen have rates much above this. Also, interest accrues while in school. Can you provide specifics about the loan source you are considering?</p>

5

<p>From the research I’ve done (though not incredibly extensive), a lot of the loans have low interest rates (around 5.5%)</p>

<p>not incredibly extensive would be correct.
Stafford is part of the federal loan program

</p>

<p>PRIME rate is not the interest rate you are charged.

</p>

<p>[Understanding</a> student loan types](<a href=“http://www.salliemae.com/get_student_loan/find_student_loan/undergrad_student_loan/student_loan_types/]Understanding”>Student Loans for College & Graduate School | Sallie Mae)
[FinAid</a> | Calculators | Education Loan Interest Rates](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>

6

<p>As the above posters have said - you will be lucky to find a student loan with a 5.5% interest rate. If you do please let us all know. </p>

<p>Also unless you are awarded subsidized loans (perkins and subsidized Stafford) as part of a need based financial aid package you will start being charged interest from the day you borrow the money. Even though the loan may be deferred until after you graduate college they will be charging the interest and adding it to the loan - then they will charge interest on the loan and interest on the interest.</p>

7

<p>You are not dumb BTW, I think that loan info is very confusing & when they are talking abut the prime rate, it is easy to think that is the rate that you would be charged, instead of all the fees and such they will load on top of that.
Better you find out now rather than a few years later.</p>