<p>One thing I’m still not sure about is student loans. From what I understand based on my research earlier today, if you have a stafford unsubsidized loan and it was at 6.8%, you are paying 6.8% on it annually until it is paid off, correct?</p>
<p>No, that’s not what it means at all. That is simply the interest rate on the loan. You accrue 6.8% of the amount of the original principal on the loan each year. For example, once you get your AA you will presumably be a junior, which means you can borrow up to $7500 for that year. 6.8% of $7500 is $510, so with an unsubsidized loan, $510 will be added to the total of your loan in the two years after you borrow it. After you finish your degree and after your 6 month grace period is over, the interest will capitalize if you haven’t paid it off - which simply means that they will add it to your loan balance, and it becomes part of the interest calculation. So your new loan balance becomes $8,520 after two years, and 6.8% interest starts to be calculated off that for the next year. And so on and so forth.</p>
<p>You can pay off as much of a loan as you want to each year. So let’s say you have $32,000 of student loan debt and you win the lottery. You can pay off that whole $32,000 in one lump sum. Or let’s say that you work out a payment plan with your lender and your monthly payment is $250, but you pick up a lucrative consulting job on the side, so now you can afford to pay more You can pay more than $250 a month so you can pay the loan down faster, if you want. On federal loans, there is no penalty for pre-payment. The faster you pay off the loan, the less interest you have to pay. You can play with the loan calculator at Finaid.org and see how it works.</p>
<p>*So if I had to take out loans right from the start at this point which end up having some money unsubsidized, that means that for the next 9-10yrs while I work on getting my doctorate, I’ll pay 6.8% the whole way through?[/i</p>
<p>First of all, hopefully it won’t take you 9-10 years to get a physics PhD. 5-7 years is about the average in the lab sciences. If you add the 2 extra years it should take you to finish your bachelor’s, then that’s 7-9 years.</p>
<p>Second of all, you can defer your loans while you are in school. Some people choose to pay off their loans while they are in grad school anyway, so they won’t accumulate so much interest on the unsubsidized loans. Some people choose to just pay the interest, since as you can see if you’ve only borrowed a small amount, the interest is pretty low. And some people choose not to pay everything and just deal with it when they graduate.</p>