<p>A few months ago, I read a post where someone said the rates were going up for the Unsubsized Stafford. Also, can someone good at finance figure out how much this loan will cost my son eventually factoring in interest? </p>
<p>He to make a decision either to work a lot of hours this year at school and not taking a loan or else just work light hours and take out the 2,600 loan to make the difference and I am wondering what would be a better scenario. Neither of us can figure out what would be better.</p>
<p>Thanks for any and all comments from the ones who are good at figuring out finances.</p>
<p>citibank say thru their <a href="http://studentloan.citibank.com%5B/url%5D">http://studentloan.citibank.com</a> subsidiary:
"Federal Stafford Loans
All Stafford Loans disbursed after October 1, 1998 that are in repayment will have a rate of 5.30% for the period July 1, 2005 through June 30, 2006. The rate for all Stafford Loans for students in school or grace is 4.70% for the same period. These rates will reset on July 1, 2006.</p>
<p>These rates are based on the 91-Day T-Bill plus 1.70% while the student is in school, during the grace period or in deferment and the 91-Day T-Bill plus 2.30% during repayment. Undergraduate and graduate borrowers (regardless of any prior outstanding loan) will have an annual variable rate capped at 8.25%.</p>
<p>Federal PLUS Loans
The rate for all PLUS Loans, disbursed after July 1, 1998, is 6.10% for the period July 1, 2005 through June 30, 2006. These rates also will reset on July 1, 2006.</p>
<p>The annual variable interest rate is based on the 91 day T-Bill plus 3.10%, capped at 9.00%.</p>
<p>Federal Consolidation Loans
The interest rate will be the weighted average of the rates of the loans you consolidate, rounded up to the nearest 1/8%, or 8.25%, whichever is less.</p>
<p>Effective July 1, 2005 - June 30, 2006, rates on Stafford Loans in grace are 4.70% and in repayment are 5.30%, so now is an excellent time to consolidate and take advantage of these low rates. You may be able to lock into a rate as low as 3.50%* and it will be fixed for the life of the loan. "</p>
<pre><code> I'd plan on 4.70%
</code></pre>
<p>American Education Service, guarantor of Pennsylvannia loans, and a state agency; <a href="http://www.aessuccess.org%5B/url%5D">www.aessuccess.org</a> has a nice chart for your viewing pleasure. </p>
<p><a href="http://www.aessuccess.org/manage/interest_rates_chart.shtml%5B/url%5D">http://www.aessuccess.org/manage/interest_rates_chart.shtml</a></p>
<p>again, I'd bet on 4.70%, which is proscribed by federal law.</p>
<p>One of the wonderful benefits of a better economy is rising interest rates, higher COA, bigger payments, and ultimately fewer kids and parents able to afford the price.</p>
<p>Again, I am not good with money, but since the interest rate is variable, if it does go too high, could my son take it out this year at 4.70 percent rate then if it rises too much next year, could he try to pay the 3,000 off next summer without repercussions?
Another scenario, if his grandma offers to help him sometime in the next 4 years (she hasn't yet) would it be a wise idea to try to pay off the loan before he graduates?</p>
<p>Another question, do the people who took out loans last year - do they have the 2.77 interest rate on that money this year or did it rise to 4.70? If they were able to keep the 2.77, they have a really good deal!!</p>
<p>I believe th einterest rate on loans went up in July unless you consolidated loans- I know that it went up on our Plus loan</p>
<p>You really need to talk to these nice people mentioned in the links.</p>
<p>We are on unsubsidized Stafford and have been making payments to the loans since the 2nd month of freshman year (now senior). </p>
<p>It is my understanding (not 100% sure, but from our experience in unsubsidized Stafford), If you start making payments, the Stafford is no longer subsidized (interest accrues) and therefore you must continue making payments until the loan is satisfied. Exactly how much of payment can you make is not specified by the lender, thus you can theoretically make a payment of $1.00 although the interest may be accruing at a higher rate. Interest is calculated by the simple method, in that the interest accummulates since the last payment, which can be as little as 1 day or whenever. </p>
<p>I'm not sure that once you start making payments, that the subsequent year's Stafford will be subsidized. I do know that you can pick and choose which year's Stafford you wish to pay.</p>
<p>For the scenario of Gma and paying off loan: Can't answer as this is a question that pertains to the future of your child's income, your income, fiscal and monetary policy, and politicians. Maybe the question you asked, "Would it be nice to be able to payoff the loans at graduation?" Yes, unless there are better alternatives.</p>
<p>take the time to download or get an application. The application will come with the MASTER NOTE AGREEMENT. Its detailed but not complicated.</p>
<p>2nd part to ebay... #5. </p>
<p>Yep, son's Non Subsidized loans increased to 4.7% from ~2.17% (automatic and ontime consecutive payment) However, we are in process of consolidating these three loans which should drive the interest to somewhere ~2.25% and somewhat less after on time payments and preauthorized payment. </p>
<p>We are in the process of applying for NonSubsidized Stafford (4.7%) and PLUS (6.1%). How much we wll eventually take and refund back to the lender is debatable at this time. In these modern times, things can change in an hour. We are playing and keeping our options open. </p>
<p>Yep, its a VERY, good deal. We were fortunate to catch a falling interest rate environment and then to lock in those rates. </p>
<p>BTW: Very good questions. For someone who doesn't know much about money matters, you are at least asking the right questions.</p>
<p>Thank you itstoomuch, seems like you are getting a pretty sweet deal!</p>
<p>I think (though its not finalized) that I will have my son pay towards his tuition with his summer earnings instead of taking the unsub Stafford, since the interest could go higher next year anyway. Then he will have to find an on campus job for books, expense money. I think he can manage but his budget will be very tight.</p>