<p>I've been offered subsidized and unsubsidized loans. </p>
<p>According to this website, there is a loan fee for both of these types of loans.
Student</a> Aid on the Web</p>
<p>Since there is a loan fee for both of these loans, is there any benefit for me to take out loans if my parents are willing to help pay for my college tuition and living expenses?</p>
<p>Also, if they help me pay, will any of the money be taxed? Will my financial aid decrease if they transfer money into my account? </p>
<p>Thanks in advance</p>
<p>The loan fees for Stafford loans amount to 1/2 of 1% - it’s not a lot. It’s always best NOT to borrow if you don’t have to. If you do have to borrow, sub loans have a very low interest rate & no interest accumulates until it’s time to pay the loan back. Remember that all loans have interest associated with them - so if your parents have the money to help you pay for school & are willing to give it to you, that’s a great thing.</p>
<p>If you are a dependent student, your financial aid won’t decrease because your parents are helping you pay. If you are independent, any money they give you will need to be reported as untaxed other income. This money will not be taxed.</p>
<p>It MAY be beneficial to consider taking subsidized loans if your parents do not want to disrupt their capital investments at the time payments are due. My kids’ 529 accounts were at a low point last year when my D started school so we decided to take the sub loans instead of taking the hit. It worked out well and gave the accounts some time to recover from poor market conditions. I think the total cost was around $34 so not a big concern!</p>
<p>The interest rate even for the unsubsidized loans is better than the PLUS that your parents can take. Unless they have HELOC or other loans they can get at better rates, the Staffords are a decent deal. Perhaps they can help you repay them when you graduate. THe nice part about the subsidized ones is that they do not accumulate interest while you are in school.</p>
<p>My answer assumed that the parents would not have to borrow to help the student. If they do have to borrow, I agree that the Stafford interest rates are favorable compared to many loans available to a parent.</p>