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Unsubsidized Student Loan

Yolanda Said:

Is it better to pay off an unsubsidized student loan first and then the subsidized loan?

We Answered:

Your Unsubsidized Stafford Loan accrues interest from the day it is disbursed. While you are in school, and during any deferment periods, your Subsidized Stafford Loan won't accrue any interest. However, once you enter repayment, both loans will accrue interest and they will do so *at the same rate*. In this sense, once a Subsidized Stafford loan enters repayment, it too becomes "unsubsidized."

So, to answer your question: as long as your loans will both remain in repayment, you might as well split the payment evenly across the two.

The only time you might want to put more money towards your Unsub Stafford loan [as opposed to your Sub Stafford] is if you plan on returning to school or applying for any type of deferment (Economic Hardship, Military, etc). During deferment periods, your Subsidized Stafford loan would again become Subsidized while your Unsub Stafford would continue to accrue interest. In this case, you'd probably be glad that the loan you'd "paid down" was the one that will be accruing interest.

[Keep in mind that a "forbearance" is NOT the same thing as a "deferment" -- in a forbearance situation, interest will accrue on both Subsidized and Unsubsidized loans; in a deferment, interest WON'T accrue on Subsidized loans but will still accrue on Unsubsidized loans.]

I want to clarify that, at any given point in time, Sub Stafford and Unsub Stafford loans always carry the same interest rates. Currently, in-repayment borrowers are paying 5.3% interest on both. This rate changes annually every July 1st.

Erika Said:

How often does interest accumulate on an unsubsidized Stafford student loan from the government?

We Answered:

The unsubsidized interest continues to accumulate, which is why the lenders have the question, " do you want to pay unsub interest while you're in school?". Once you leave school it capitalizes, (adds to the original balance) and then you get to start paying interest on the new balance.

You ought to meet with a financial aid officer at your school to get a more precise answer.

Jesse Said:

Would you recommend me getting my unsubsidized student loan?

We Answered:

First, with any loan. YOU NEVER JUST PAY THE INTEREST. You have to pay the interest and the principal. With subsidized loans, interest does not accrue while it is in deferrment. Which means, that balance you owe would remain the same as long as you in school. However, once you fall below part time for 6 months, interest THENS accrues. So, unless you plan on paying it off while in deferment, you will have to pay back the principal + interest.

You are not educated on how loans work, you need to speak with your financial aid office and see what your need is and understand how things work.

Elaine Said:

I turned down an unsubsidized federal student loan, but now I need it, what should I do?

We Answered:

Just go to the financial aid office. They will re-set your award for you, and you can then go back and accept what you need. Or your office might re-accept the award for you. Either way it is not a big deal, just stop in or call tomorrow.

Ross Said:

Can anyone get an unsubsidized student loan that will pay for school and living expenses?

We Answered:

Honestly, it comes down to how much the cost of attendance is at the college that you are wishing to attend and the amount of loans that you are eligible for. It is extremely important that you complete a FAFSA (Free Application for Federal Student Aid) so that the Financial Aid Adviser of whatever college you wish to attend can have your EFC (Expected Family Contribution) to see how much loans you may be able to get.

There is a limit as to the loans that you can receive every quarter or semester that you attend. By having the FAFSA completed before you meet with the Financial Aid adviser, they will be able to better determine what you can qualify for. If you qualify for the maximum amount in loans, depending on your grade level, it maybe just enough to cover your educational costs (tuition & books) and have some extra funds for living expenses.

The FAFSA is relatively easy to complete, just make sure you have your tax information with you when you complete it. If it is confusing in any way, the Financial Aid team at your chosen college can help you.

Derek Said:

How does paying interest on an unsubsidized student loan work?

We Answered:

Stafford loans do not require you to pay anything on them while you are enrolled at least half time. So you will pay 0. Yes, you are charged interest. The interest is added on the the amount you owe while you are a student... you won't pay anything.

Cynthia Said:

What do I ask for in an unsubsidized student loan?

We Answered:

Read through the promissory note for all lenders (repayment options and terms, deferment options, and fees especially).

The best rule of thumb is to borrow the minimum that you need to pay for tuition, fees, and books. Try to find a job to cover your bills.

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