Our daughter is going off to grad school. we are fortunate that we don’t need financial aid but realize now that she should have some loans to have to repay to have that experience.
To get low cost student loans, am I correct that you need to complete the FAFSA? Then everyone automatically gets (to apply?) for a stafford loan? Is that the cheapest student loans available? Is there a different route to go / are there other loan sources?
Grad school is a little different. Yes, she’d get the stafford loans by filing a fafsa (she doesn’t have to apply again, the fafsa is the application) but can just accept them from the school portal.
Private loans may have a lower rate for grad school.
That’s crazy talk to take out loans to ‘have that experience’. Because she will have to be accruing interest while shs is not in a position to begin to repay it. Unnecessary interest will accrue. This is the reality for most grad students, as there are often no other options. Only take loans because you need the money or want her to pay a portion. Start a savings account because that is a better ‘experience’ to have imo. Yes she only has to File a FAFSA to qualify.
Right now, graduate/professional Direct Unsub Loans are at 5,8%. Loan fee is 1.068%
Simple interest accrues monthly starting from disbursement
She may get a better rate with a private loan and parent cosigner. Or you could make a contract with her from the bank of Dad. Then you get the one percent loan fee and don’t throw it and interest away outside the family. (lol, I think)
This is like deliberately breaking her arm so she can have the experience. Some experiences are best avoided if at all possible.
If I understand the question, you have the money to pay for your daughter’s grad school but think there is a benefit to your daughter in having the experience of borrowing money and repaying the loan. Is that right? If so, why not lend her the money yourselves? You can charge her a market interest rate, have her sign a promissory note and set up a repayment schedule.
FWIW, I had the experience of borrowing for school and repaying the loans, and I don’t think I really gained much from it. I could have gotten the borrowing/repayment experience a little later when I bought a house and been none the worse for it.