quick stafford question

Paying for College
1

<p>if my EFC is high (like around 70k), then ALL of the $5500 i will be eligible for during my first year in college will be unsubsidized, right?</p>

2

<p>Yes. Subsidized loans are need based. If you have no “need” based on your EFC, your loans will all be unsubsidized.</p>

3

<p>maybe i can make sure all my preconceptions are true:

  1. the unsub interest rate is FIXED at 6.8%
  2. anyone, regardless of credit or financial need, can get at least 5500$
  3. deferment is almost guaranteed
  4. the maximum i can get subsidized is 3500$
  5. the usual term is ten years</p>

<p>i dont want any surprises :)</p>

4

<p>

Yes

Yes, for freshman year ($6500, $7,500. $7,500 for subsequent years). Some colleges do not automatically offer dependent students unsub loans as they assume parent will go with PLUS loans. But if they do not offer them, you can ask.

With unsub loans you are responsible for the interest from day 1. You can either pay it as you go, or defer it until the loans go into repayment. Of course, this would mean the debt will be growing exponentially each year.

For a freshman, yes (but only if you have need). The possible subsidized amount increases to $4500, $5500, $5500 for subsequent years.

Yes. You have a grace period of 6 months after you graduate or drop below half time, then the loan goes into repayment.</p>

<p>

There is a fee for getting the loan. I *think *it is about 1%. it is deducted up front. So if you borrow $5000 you would actually receive $4950 (but would owe $5000 and the interest would be on $5000).</p>

5

<p>

thanks!..i thought the interest would be capitalized into the cost of the loan. i know there would be less equity on my part if i defer it, but does the total debt actually grow?</p>

6

<p>Not sure what you mean. If it is capitalized into the loan then the debt is growing. For instance if you borrow $1000 and don’t pay the interest then at the end of year 1 you will owe $1068, (or more depending on when the interest is added - monthly quarterly etc), at the end of 2 years you will owe $1140, 3 years $1218, 4 years $1301 etc.</p>

7

<p>oh i see nevermind…i used that word wrongly lol</p>

8

<p>The net loan fee is $5 per $1000 (loan fee is 1% but there is a 0.5% rebate so net is 0.5%). When the loan is in deferment, the interest continues to accumulate. With an EFC of $70k, the whole loan would be unsub. With an EFC that high, hopefully your parents would help by paying interest on a regular basis.</p>