unsubStaffod Loan Sharks capitlization--how much am I really paying?

Paying for College
1

<p>I have a quick question about just how much a Stafford loan will end up costing me.
I’ve tried various calculator on the internet, and they don’t take into account the fact that I will pay off this loan within one year of graduating nor that there are three disbursal period for my one 7500 unsubsidized Stafford loan. </p>

<p>I’m really really confused. Can anybody show me just how the calculation works?</p>

<p>If I take out a 7500 stafford loan, and defer the interest payment for two years and after two years upon graduation I pay off the whole loan + interest +capitalization (interest on interest), within one year after I graduate (so three years after I first start taking out the loan, and the loan is disbursed October 1st of 2010, January 1st 2011, and March 1st 2011, by the time I pay it all off how much will it cost me?</p>

<p>If anybody could answer any of these questions I would be EXTREMELY grateful. The fin aid office keeps giving me the runaround (I don’t blame them, they are very busy, but still…)</p>

<p>1) What if I pay the interest off while in school? How much would the payment be per month? Does it take into account capitalization?</p>

<p>2.) Also, isn’t there a 4% orgination fee and disbursal fee and other hidden fees with Stafford unsub loans? So if I’m supposed to get 2500 per quarter, does this mean that I will only get 2500 – 4% of that, or that I will just have to pay 4 % more after??!</p>

<p>3) My mother will probably get denied a PLUS loan. When that happens, I will get more unsub Stafford loans. Can I then just cancel my already disbursed subsidized loans?</p>

2

<p>The rate on all unsub Staffords is 6.8%. That’s $68/year/thousand so the monthly interest on each $2500 you borrow would be $14.17. If you defer, it will capitalize and you can play with that calculator here to find out what the final balance would be:
[FinAid</a> | Calculators | Cost of Interest Capitalization Calculator](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>

<p>Once you have a final balance, you can plug it in to the loan repayment calculator to get an idea of your payments and options:
[FinAid</a> | Calculators | Loan Calculator](<a href=“Your Guide for College Financial Aid - Finaid”>Loan Payment Calculator - Finaid)</p>

<p>Stafford origination fees are nowhere near 4% anymore…by law, after July 1, 2010 the total origination fee is 1.0%. Direct loans offer a 0.5% rebate on the origination fee (and I believe that all schools are now required to make direct loans). But, if you don’t make 12 on-time monthly payments, a charge for the difference between the 0.5% origination fee and the 1.0% origination fee will be added to the outstanding balance of the loan. Otherwise, the origination fee is deducted from the loan proceeds when distributed.</p>

<p>Why would you consider getting rid of your subsidized loans?! The subs loans mean you incur NO interest charges while you’re in school at least half time and they have a much lower interest rate…4.5% for loans made for 10/11 and 3.4% for 11/12. You should definitely keep any/all subs loans you’re offered!</p>