<p>I know that subsidized loans do not accumulate an interest rate, but I want some clarifications before I take out any type of loans. </p>
<p>I am currently offered 2 subsidized loans:
Federal Perkins Loan
Federal Subsidized Direct Loan</p>
<p>What will happen when I take out these loans? Does it mean that there will be no applied interest rates? Also, what is the timeline for when the interest rate begins to apply to my loans?</p>
<p>So say if I borrow 1k of subsidized loans, does that mean I will only have to pay $1k back?</p>
<p>Many thanks :)!</p>
<p>There is an interest rate. But the government pays the interest on Subsidized loans until you graduate or drop below half time plus a grace period. Once you reach the end of the grace period you have to start paying the loans back and also the loans start accruing interest which you must also pay.</p>
<p>The Perkins loan has a 5% interest rate and no origination fees. It has a 9 month grace period.</p>
<p>The subsidized Stafford loan for 2011-2012 has a 3.4% interest rate and an origination fee. It has a 6 month grace period.</p>
<p>
Only if you repaid the loans before the end of the grace period. If you paid the loan back over the normal 10 years then you would pay the principal and interest. For instance a 5% loan of 1000 paid back over 10 years you would end up paying back about 1270. For a 3.4% loan it would be about $1180.</p>
<p>Yay, so it’s not that bad then :)! Thanks swimcatsmom. I just needed someone to clarify since I’m a still a rookie with the financial aid process :)!</p>
<p>PS- Do you know what the grace period is for general sub loans? Thanks :D!</p>
<p>EDITED: So should I take out all the subsidized loans that are offered to me? I heard that if you don’t take out the loans they offer you, they will eventually take it back for the upcoming years. Since there is no interest rate, I can always turn the leftover back in right?</p>
<p>Perkins = 9 months grace period
Stafford (also called direct loans) = 6 months grace period</p>
<p>Thanks again swimcatsmom :)!</p>
<p>One last question before I stop bugging you :P!</p>
<p>So should I take out all the subsidized loans that are offered to me? I heard that if you don’t take out the loans they offer you, they will eventually take it back for the upcoming years. Since there is no interest rate, I can always turn the leftover back in right?</p>
<p>The word is that interest rates will be jacked up next year for some of these loans, so it may be wise to stock up. Just make sure they are not stocked up in an account when you are filling out your financial aid forms for the next year or they’ll be counted as an asset and could reduce your aid award.</p>