<p>Hello</p>
<p>I know that this question probably gets asked again and again, but I was searching through the forum and couldn't find an answer quickly.</p>
<p>My DS' school offered $3500 in subsidized Stafford and $2000 in unsubsidized Stafford (along with some grants).</p>
<p>It seems to be a nobrainer to take the subsidized Stafford loan. However, my husband and I can't figure out whether it really makes sense to take the Unsub loan, since you have to start paying interest right away, and you end up paying off quite a bit of the interest before the 4 years is even finished.</p>
<p>So, is it better to forego the Unsub and figure out another way to come up with the $2K? Have people looked at other ways of financing, such as mortgage line of credit? 6.8% interest these days is a pretty high loan amount.</p>
<p>If you have examples of what you have done to make this work, please share.</p>
<p>Thanks!</p>
<p>You do not have to start paying back the interest on the unsub stafford right away. While it is recommended, it can be deferred til after the student graduates. I have no direct experience with this, but many here on CC strongly recommend a HELOC for paying college cost because the interest rates are better.</p>
<p>Our DS last year of undergrad, he was offered the subsidized Stafford which he accepted and also a small ($1600) unsubsidized Stafford.</p>
<p>We had him accept the unsub then we paid it off over a few months in chunks of 3-4 hundred as able. We paid easily online and could see it retired through the student loan site so we knew where the balance stood as we went.
We didn’t want to ‘reopen’ a balance on our home equity line as we had just fought that one down to zero and were happy about that. :)</p>
<p>We always took both, it was just easier and we already had a home equity loan to pay off. The first two years with my son, we paid off the unsubsidized loans before he graduated, the last 2 only the interest. The difference with these loans vs another, is that you don’t have to pay monthly payments and at least with ours, we could pay whenever we had extra money and not be in default.</p>
<p>My daughter got a large Perkins loan as well and the sub and unsub staffords. We were told that we couldn’t get the Perkins unless we accepted both staffords so we had no choice - though I wanted to reject it. We will pay it off immediately as the school said we could do that.</p>
<p>That must be something specific to your school. At my daughter’s school she is not required to accept the unsub loan in order to accept the Perkins. I think that is wrong that they do that, but I guess you are between a rock and a hard place.</p>
<p>I wasn’t told that either, my daughter didn’t go to the school with the perkins, but each loan had an accept or decline button, there wasn’t a “you have to take this for that”.</p>
<p>If you can get a better interest rate and terms, go right on ahead. The Staffords are a better deal than the PLUS and we should have had our sons load up on them and then we just pay them, but we did the PLUS route which is more expensive due to it being simpler since we needed more than the Stafford would give, and back then you didn’t need FAFSA to get a PLUS. It made it one clean swoop, but not the optimum financial decision. </p>
<p>This year, we may have both boys take out maximum Staffords which would mean $13K in loans and DH and I will pay them. Just a better deal than the PLUS and though it leaves us a bit short, we decided to make up the shortfall by scrimping bigtime and begging the grandmoms for some help on stuff. We just might be able to make it. The tough period will be 2012 up until my then senior graduates college. So that January tuition payment is going to be the big killer for us, not to mention the $24750 shortfall I am mulling right now for August. Sigh. Such is the life with kids in school and tuition payments.</p>
<p>The stafford interest is very low this year (not unsubsidized) and I am definitely having my twins take the 3.4% interest and the unsubsidized since it’s cheaper than a Plus. </p>
<p>I worry when my third graduates next year since one school counts grad school, but as you said, “such is the life”.</p>
<p>crizello–We’re having S take the subsidized loan and we are paying the interest while he’s in school. He’s carrying his end of the school’s financial expectation (not a requirement) that students will contribute about 4 grand from summer and school-year earnings, so the Stafford loans are a benefit to us in our effort to get together the substantial amount the school’s generous grants don’t cover. I understand that it’s definitely better to pay the interest as it accrues rather than to add it to principal.</p>
<p>In mid-2012, the interest rates of Perkins and subsidized Staffords are each scheduled to increase to 6.8%, unless Congress comes up with an alternative plan. I wouldn’t count on this Congress coming up with a solution that is better for students.</p>
<p>I can always count on this discussion forum to provide such wonderful responses!</p>
<p>Thanks for all the feedback. We are still wrestling with whether to take the $2K in Unsub loan or just figure out a way to cover this amount. It is such a small amount that it seems strange to finance it.</p>