Most fin aids include $5500 Stafford Unsubsidized Loan. Are there any advantages of taking this loan, if you can afford the college without it? I believe interest rate is high for such loan like 8.5%. If you need, isn't taking some money from home equity line of credit better since that will have interest rate lower than 8.5%
If you can afford the college without it I see no advantage in taking an unsubsidized loan. We have turned them down for both of our children. You are correct that a home equity line of credit should have a better interest rate. In addition, the interest may be tax deductible.
Just so you have the correct information for making your decision. Unsub Stafford interest rate is 6.8%. Student loan interest is also tax deductible. A Stafford loan is a student loan and in the students name rather than the parents.
Quick question: We received offers from schools with only the unsubsidized loan (understandable considering assests) but the school my daughter chose to attend just now sent their "no need" letter. If we qualified for the unsubsidized stafford at her other accepted schools, shouldn't we have qualified at this one? I'm new to all of this and just can't figure out the difference between schools since this is a federal program. I called finaid and he sounded a bit flustered about the whole federal issue and told us to "appeal" (he was trying to be helpful but really couldn't figure this one out on the phone). Anyone know? Thanks!
Last edited by LizTheodore; 05-01-2009 at 02:52 PM.
Reason: added info
The unsub Stafford is not need based and everyone who files FAFSA (and is not otherwise ineligible because of maxing out, drug convictions etc) is eligible for the unsub which is $5500 for a freshman. Sounds like you need to talk to someone further up the food chain.
We are trying to avoid the PLUS as the interest rate is not attractive to us. Higher than credit cards, HELOC. It wasn't a good choice for us. We are paying ours off by HELOC and will go that route next year. For the kids, it is a good first loan. Where else can they find a 6.8% non secured loan without a cosigner? It also helps them have some financial accountability for college cost and is a start for their credit record.
