Federal Stafford Loan Question

<p>Hi, I am a bit confused about the Stafford Loan. Let's say I borrowed a total of $10,000 over the 4 years of my college, how much do I have to pay back after 6months? I know there is an interest rate and I won't be paying the interest rate while I am in college, but I don't understand how the interest work after I graduate. And am I able to pay back the whole $10,000 right after I graduate, so that they won't count any interest rate? Thank you very much!</p>

<p>It depends on what type of loans you have received. If the full $10k is in subsidized loans, there will be no interest accruing on your loan balance. If any portion of the $10k is in unsubsidized loans, then the interest will have begun accruing once the funds were disbursed to the school so after the 6 month grace period, you would owe the $10k plus the accrued interest. You can still make a lump sum payment, but you will want to check with the lender to determine how much interest has actually accrued.</p>

<p>I am going to be using subsidized loans only. For subsidized loans, I thought there was going to be interest once I graduate. My question is is the interest rate only for those 6months between graduation and time for me to start paying back or does it start AFTER 6months?</p>

<p>For a subsidized Stafford loan the govt pays the interest until you graduate plus for a 6 month grace period. So there will be no interest accruing until after the 6 months.</p>

<p>Oh. What if I am able to pay off the whole loan money that I borrowed right after 6months or before 6months? How is the interest going to add on to my borrowed money? And am I even able to do that, just like pay off the whole thing without more interest.</p>

<p>A subsidized loan the govt has been paying the interest for you. If you pay the loan off before the 6 months grace period is up you will not have to pay any interest.</p>

<p>If you do not pay it off before the 6 months grace period is up then once the grace period is up you will start being responsible for the interest on the outstanding loan from that date.</p>

<p>So if you owe $10,000 and the 6 month grace period is over on July 1st 2010 and you pay it all off on June 15th, 2 week before the grace period is up, you will pay no interest. But if you pay it off on July 15th, 2 weeks after the grace period is up, you will owe 2 weeks interest.</p>

<p>Oh, thank you so much swimcatsmom! Because I heard from some other people saying that loan will charge you an interest no matter what, so I got confused about that.</p>

<p>The subsidized loans will not charge you interest until you reach the end of the grace period. They are probably the best loans you can get. My daughter is fortunate that, like you, she has only subsidized loans.</p>

<p>Unsubsidized loans will charge interest from the day the loan is disbursed and the interest accrued has to be paid whenever the loan is paid off. Perhaps the people you heard from don't understand the difference between the subsidized and unsubsidized loans.</p>