Federal Government loans are split into two different loans (subsidized and non-subsidized). Subsidized loans are available to undergraduate students who meet certain financial need criteria. If you qualify for this type of loan, the federal government will pay the interest on the loan while you are in school at least half time and during periods when you are authorized to defer your loan payments. Unsubsidized loans are available to undergraduate, graduate and professional students regardless of financial need. You are responsible for the interest that accumulates on an unsubsidized loan from the date the funds are disbursed until the funds are repaid in full. You have the option to pay the interest during school or postpone payment. If you postpone payment, the interest will be added to your principal balance. Private banking loans are loans you can obtain from banks, credit unions or other lending institutions to help cover college expenses not met by scholarships, grants, federal loans or other types of financial assistance. Most private loans are made directly to students, meaning that it becomes their financial and legal responsibility to repay the loan. The interest rate for bank loans was 7.5%. Using the calculator it would take 11.5 years to pay back the money ($1,735.15 per year). The interest rate for subsidized loans was 5%. It would take 43.4 years to pay back this loan ($460.54 per year).
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