So I took out $2,000 on unsub stafford loan and I just have a question about that interest that accrues. So after I used that $2,000 on my bill and I used it all up, the interest will stop going up right?
Nope. The interest will continue to accrue.
Interest will continue to add up until the loan is paid off.
so if I want to pay the interest as it is now could I just pay the initial loan after i graduate? Or will the interest still continue to grow even though I paid what it is now.
If you plan to pay the accrued interest now, there won’t be any interest to be capitalize when you graduate.
So the interest for $2000 right now for me would probably be around 2.4k so if I pay this 2.4k as soon as possible then there would be no interest left and I can just pay the 2k from the initial loan once i graduate if I want to?
If you pay all the accrued interest each month between now and when you graduate and none of the principal, then the balance when you graduate will be $2000.
You are saying that the accrued interest right now on your $2000 loan is $2,400 thus the total balance now is $4,400?
But if I pay the accrued interest now when it is not capitalized, like I pay it all off now. Does this mean that the interest rate will not capitalize and I will not have to pay as much interest if I were to pay now rather than after I graduate?
^ That would make the loan more than 14 years old. I doubt that. More likely $400 in interest.
OP, check with you lending institution to get the right number and ask how to pay off the interest monthly.
I will on tuesday when I can call them. You said 400 in interest as in like monthly? or are you saying 2000 with the interest of 400 so 2400 for the whole loan so far? @“Erin’s Dad”
If you have a $2000 loan, your interest for the first year will be about $400. Pay that off and your loan balance will still be $2000
@thumper1 So if I pay that 400 there will be no more interest? then i just need to pay the initial loan?
Unless the interest rate is 20% per year, the interest after 1 year would not be $400 on a $2,000 loan.
Until you completely pay back the full $2,000 loan, the interest will keep accumulating.
If you pay the $400 interest you have already accrued NOW, your principal balance will still be the $2000 that you borrowed. That $2000 will continue to accrue interest…so if you borrowed NO more money…you would have an additional $400 interest at the end of next school year.
Now…if you borrow an additional $2000 for the next school year, you will have $4000 total in loans…and your interest for next year would be closer to $800.
Your borrowed money will continue to accrue interest.
@thumper1 This is not a sure shot but so basically I will be paying 400 each year till i graduate if i do not accept anymore unsub loans so lets say i graduate in 3 more years in total my intererst will be 1600 that will be all at capital?
Well the interest accumulates interest, so there’s that. The best thing you can do is to borrow as little as possible and to pay it back as soon as possible. Having a small loan is not the end of the world, but the sooner you can pay it back, the better off you are.
I don’t think your interest on a $2000 loan at 4% would be $400.
@madison85 OT @BelknapPoint what would the interest be for a year on a $2000 loan at 4%…$80?
Let’s start over…what is your current loan balance and what is the interest rate?