Direct Subsidized Loans- Loans that are meant for undergraduate students who proved to the government that they are in need of financial aid. The interest rate is 4.66% compounded but luckily, the interest rates don't start until you're completely out of college, and there's a six-month grace period for you to get a good job and start making payments. Interest is added monthly
Unsubsidized Loans- Loans that can be pulled out by basically anybody that has to do with college. Everybody meaning undergraduates, graduates and even professors. Though they have a lot in common with Direct Subsidized loans like how they both have 4.66% interest rate, they also have a few differences such as how the Unsubsidized Loans start gaining interest the minute you withdraw money all the way until you make the final payment. Interest is added monthly
PLUS Loans- Loans that are a little separate from the loans above. For starters, the interest rate is 7.21% which is a little higher than 4.66%. Not much, but it's a thing. PLUS loans have a 4% loan fee that is auto added as part of the payments for your loans. You do, in fact need to be a college student or be enrolled in college in order to withdraw the loan though. The interest can start piling up when you're in college, unless you apply for a special grant that pushes the interest payments to only start after you graduate but there is no grace period.
For example, if I go to college for 4 years, taking out $5,000 each year to pay off loans, since interest doesn't touch the loan for 6 months after I graduate, that'll be an even $20,000 in debt when the grace period ends. If I took out the loan with the Direct Subsidized Loan, making $200 payments every month, it'll take me 127 payments and I would end up paying about $25,365.98 in total and that means there's going to be $5,365.98 just in interest. With this data, that means I would be able to finish paying the loans in almost 11 years.
Just for funsies, I decided to calculate how much I'll have to pay back if i went to Central Michigan University and got a separate apartment because room and board is almost as expensive as the tuition. So, Central has a tuition of $11,550 and if you take out that amount for all 4 years of undergraduate school, I'll be in $46,200 in debt. Once interest tacks on after 20 years, I'll be $71,109 in debt. If I have the loan term scheduled to pay off my loan in 20 years, I'll be making monthly payments of $296.29 paying $24,989.29 in interest over that time period.
Unsubsidized Loans- Loans that can be pulled out by basically anybody that has to do with college. Everybody meaning undergraduates, graduates and even professors. Though they have a lot in common with Direct Subsidized loans like how they both have 4.66% interest rate, they also have a few differences such as how the Unsubsidized Loans start gaining interest the minute you withdraw money all the way until you make the final payment. Interest is added monthly
PLUS Loans- Loans that are a little separate from the loans above. For starters, the interest rate is 7.21% which is a little higher than 4.66%. Not much, but it's a thing. PLUS loans have a 4% loan fee that is auto added as part of the payments for your loans. You do, in fact need to be a college student or be enrolled in college in order to withdraw the loan though. The interest can start piling up when you're in college, unless you apply for a special grant that pushes the interest payments to only start after you graduate but there is no grace period.
For example, if I go to college for 4 years, taking out $5,000 each year to pay off loans, since interest doesn't touch the loan for 6 months after I graduate, that'll be an even $20,000 in debt when the grace period ends. If I took out the loan with the Direct Subsidized Loan, making $200 payments every month, it'll take me 127 payments and I would end up paying about $25,365.98 in total and that means there's going to be $5,365.98 just in interest. With this data, that means I would be able to finish paying the loans in almost 11 years.
Just for funsies, I decided to calculate how much I'll have to pay back if i went to Central Michigan University and got a separate apartment because room and board is almost as expensive as the tuition. So, Central has a tuition of $11,550 and if you take out that amount for all 4 years of undergraduate school, I'll be in $46,200 in debt. Once interest tacks on after 20 years, I'll be $71,109 in debt. If I have the loan term scheduled to pay off my loan in 20 years, I'll be making monthly payments of $296.29 paying $24,989.29 in interest over that time period.