<p>I was wondering, would it be worth it to take out a DirectPLUS Loan. If so how much? I was also wondering if unsubsidized and subsidized loans were also worth taking out? This is the only finicial aid I am qualified for. Along with a 3,000 work/study grant. </p>
<p>financial* </p>
<p>It all depends upon your situation and alternatives. Unfortunately, the loans are often tools best used by those who don’t desperately need them. They are not financial aid, in that they do have to be repaid. Those loans that are subsidized are “aid” in that the interest is subsidized while you are in school, but in this low interest environment, it’s really not a huge plus. But if you need the loans, the subsidized ones are the first to take, usually up to $3500 subsidized, $2000 unsubsidized for the student. The Unsub direct loans have an interest rate just under 4% and that starts accruing as soon as the money is disbursed.</p>
<p>The DirectPLUS loans are not for students but for a parent. The parent has to APPLY and a credit check is performed. Any outstanding accounts over 90 days, I believe and the parent is denied. If parent is denied, the student can get $4k more that freshman year in Direct student loans. Parent rates are about 7% interest and start cranking it up as soon as the money is disbursed. </p>
<p>It is not a question whether it is worth to take it, but rather do you need to take it and can you afford it?</p>
<p>How much do you and your parents have to borrow?</p>
<p>Side Note / Related Question re: Freshman Year: If there’s some money in a small 529 account and it’s earning more than 3.5% (say it’s grown by 13% over the last 2 yrs), would it be best to go ahead and accept the $2,000 unsubsidized federal loan offered (to cover part of COA expenses) rather than take $2,000 out of a 529 that is doing well? Then use the $2,000 in 529 money during soph or junior year and plan to take no further unsubsidized loans… Hate to borrow the unsubsidized amount if we don’t really HAVE to! Thoughts?</p>
<p>^529 could crash in the future.</p>
<p>Take the subsidized loans. You can pay them off later with discretionary funds and take out the 529 money your last year. There is no reason not to take out the subsidized money, unless you are undisciplined and likely to blow it. You can invest it in a 2% CD, maybe use it as further contribution to a 529, a lot you can do, as there is no interest charged as long as you pay it back as soon as you are no longer a full time student. </p>
<p>The only issue with NOT borrowing the unsub money when barely ekeing by, is that the amounts are “use 'em” or lose 'em. If you don’t borrow by the year end deadline (and I suggest you do wait with the unsub till towards year end so you save on that interest if you don’t need it), it’s gone. You can’t borrow that amount AND the next year’s allotment because you did not use that money freshman year. However, if you don’t borrow the max, the money could be there for a fifth year if so needed. </p>
<p>My parents have to borrow around $6,000 a year.</p>
<p>Dasqa21, before your parents borrow anything, see how much YOU can get from Direct Loans. If you are being offered subsidized Direct student loans, that’s zero interest while you are a full time undergraduate student. The unsubsidized part is at under 4% interest. The best your parent can get through PLUS is a little under 7% interest. As a freshman you can borrow up to $5500 through Direct Loans. If you need more, one parent can apply for PLUS. The PLUS system does not require income, job or a credit score,but it does check the credit report on that parent applying and if there are bills 90 days overdue on the report, it’s a deny. Then the student can get another $4K on top of the $5500 freshman year when that happens. </p>
<p>$6k for each year will be $24k.<br>
who will be paying that back? you? your parents? </p>
<p>Is the $6k in addition to the Direct unsub/sub loans in your FA pkg???</p>