<p>My son just received his FA package which included work study, subsidized Stafford loan and unsubsidzed Stafford loan. He will need to take out a private Signature loan to meet the costs of attending. Our dilemma : does he accept the unsubsidized stafford loan ($2,000) or should he roll the amount into his Signature loan? Unsubsidized Stafford loans are fixed at 6.8% and the Signature loan is variable with the present interest rate of about 4.75%. </p>
<p>Any input would be helpful.</p>
<p>Thanks</p>
<p>I think he should take as much as possible from the Staffords, both subsidized and unsubsidized, to minimize the amount of the private loan. While the rate for the private loan is low now, it can and most likely will go up in the next 10-20 years, which is how long he is likely to hold the loan. It wouldn’t take much movement in the PRIME rate to take that loan above 6.8%.</p>
<p>Also, the Stafford loan has the possibility of loan forgiveness for certain kinds of public service, but the private loan doesn’t.</p>
<p>Take as much of the stafford as you can, subsidized and unsub. Fixed rate, government backed and loan forgiveness for certain careers. Also, laws may change in the future about them which may be better for student. I am not advocating this but just some info, private student loans are not dischargable in bankruptcy. Can never get rid of them, no matter what.</p>