STAFFORD LOANS: COLLEGE QUESTION?

What is the disproportion in between Subsidized Stafford loan and Unsubsidized Stafford loan? Which is improved to take out?

{loan for tution}

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PETA May 6, 2014 at 2:10 pm

Subsidized loan the interest is lower but the interest does not start until the loan goes into repayment which is 6 months after you quit, grauate or fall below half time. Must demonstrate financial need (meaning those who are low income, low asset range) Can be offered 3500-8500 depending on year in college.

Unsubizided loan the interest is higher and the interest starts when you get the loan. Repayment starts 6 months after you quit, graduate or fall below half time. Can be offered 5,500 to 20,500 depending on year in college.

As an example about the unsubsidized and the interest, last year my daughter accepted 5,500 and her interest that added up all year was 80 dollars about.

With an unsubsidized loan you just want to make sure you pay the interest before the loans go into repayment. That will keep the cost down, otherwise they will take the total amount of the loan and add the interest and then you will have a higher balance and as you continuing paying it after graduation it charge interest on that higher balance (called capitalization). I called the Stafford reps who told me its best to pay the interest yearly and before it goes in repayment. You cannot pay the interest ahead of time before it adds up so just do it yearly or just before repayment.

Here is a good site: http://studentaid.ed.gov/students/attachments/siteresources/Funding_Education_Beyond_HS_2011-12.pdf

Both loans are better than private loans because of the fixed interest rate, flexible payback, no credit check or cosigner.

Subsidized is better, both still good.

Many students have these.

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