I recieved both Federal Direct Unsub Loan and Federal Direct Parent PLUS Loan…
I plan on accepting at least 1 of the loans offered but only partial of the amount.
I did research on both:
(summary in a nuttshell)
direct Unsub:
- responsible for paying interest during all periods
- interest rate: 5.05%
Direct Parent PLUS:
- interest rate: 7.6% fixed interest rate for life of the loan
- loan fee: 4.248%
- and something about having a choice of requesting a “deferment” ?
I dont know which loan would be the best choice for me in the long run after I graduate…
What are the amounts of the loans?
I assume you are the student—the direct unsub loan is taken out by students. Total Federal Direct Student loans (sub and unsub) are limited to $27K in total over the 4 undergrad years, ($5.5K, $6.5K, $7.5K, $7.5K). Loan rate is dropping to 4.53% on 7/1/19.
Parent plus loans are taken out by parents, and they are responsible for paying it back, not the student. That rate is also dropping July 1, to 7.08%.
Generally, many think it’s best to limit undergrad student loans to the $27K, and not have one’s parents take on any debt. Of course everyone’s situation is different, but if grad school is in the future, or you intend on working in a job with an average salary, one would limit undergrad debt.
Use this calculator to see what the monthly payments would be for any loan, and what salary is required to comfortably make that payment. https://mappingyourfuture.org/paying/standardcalculator.cfm
The Parent PLUS loan is not best for you, because it is not a loan that is being offered to you. It’s for your parents, should they choose to borrow. The only loan you may borrow is the unsubsidized loan. If you will be borrowing, that is the best loan for you (as opposed to your other choice, which is a private loan).