Is a Federal Unsubsidized Stafford Loan a Good Deal?
Having student loans is not the best case scenario for paying for college. However, they are a necessity for many students if they wish to finish their degrees. Unsubsidized Stafford loans from the federal government provide many with the money they need to pay for their college educations.
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Interest Rate
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The interest rate on Stafford loans are generally lower than private bank loans. As of 2009, the average interest rate on private student loans is 12 percent, almost double the rate of 6.8 percent for unsubsidized Stafford loans as of December 2010. This reduces the amount of money you have to pay overall when you begin to repay your loans.
Interest
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Interest does accrue on your unsubsidized Stafford loans while you are in college, but you can defer payment on the interest until after you graduate, according to Studentaid.ed.gov. This is the case with private student loans as well. Subsidized Stafford loans do not accrue interest while you are in college. If you can pay the interest while you are in school on your unsubsidized loan, however, the end result will be a lower total amount to pay back.
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Eligibility
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Unsubsidized Stafford loans are not dependent on a student's financial need. However, subsidized Stafford loans are. So, if you are not able to prove financial need on the application for federal student aid, you might still be eligible for an unsubsidized Stafford loan to help you pay for college.
Scholarships and Grants
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If you have applied for as many scholarships and grants as you are eligible for, you might feel you need to get federal or private student loans to help you finish school in a reasonable amount of time. However, if you are determined to go to college without having any debt, working and saving your money or getting scholarships and grants are the best choices.
Ramifications
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Whether an unsubsidized Stafford loan is a good deal depends on your financial condition. If you are in a time crunch, have spent all of your savings, or find that your scholarship and grant options are exhausted, and private loans are the only other choice, unsubsidized Stafford loans can be a good idea. However, if you have other options open to you like working while you go to school to pay for your tuition or applying for just one more scholarship before you take out any unsubsidized Stafford loan, it would be better to pursue those options.
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