Joseph asks…
Is the stipend the same as the Direct unsub loan?
Nagesh answers:
No, a stipend and direct unsubsidized loan are different. A stipend is a form of salary, such as for an internship or apprenticeship. A direct unsubsidized loan is a student loan in which the interest accrues one the loan has been fully dispersed and your loan repayments start 6 months after you graduate, leave school, or drop below half-time status. You will have 10 years to fully repay your loan.
The biggest difference is that a stipend is not something you have to repay later. You earn the money by working.
Helen asks…
Direct Unsubsidized Loans and FAFSA?
So I am going to be a freshman in college this year (2013-2014) and I am having so many questions about loans and things. So lets begin…I have completed my FAFSA and they said that I am eligible for a Stafford thingy. It’s worth I think $5,500. It doesn’t sound like a lot but because I decided to do freshman year at a community college tuition is only like $4,000 I believe. Moving on, I decided to log on my Student Portal (the little thing with all your information) and I checked out my finances and I saw that I have been given an DIRECT UNSUBSIDIZED LOAN of $4000.
1. Does that mean I will have to pay this back out of my pockets or will FAFSA cover it or what?
2. Can anyone give me more info on how all this FAFSA and loan stuff works?
I am so confused. Because it’s the weekend the school isn’t open, I can’t just walk in and get all my questions answered. So please help me guys thanks 🙂
Nagesh answers:
Because it is a LOAN, you WILL be required to pay it back. Normally, you won’t be required to begin payments until after you graduate. The bad news is that the loan continues to accrue interest until it is paid back in full. Also, because of the type of loan, it cannot be included in a bankruptcy.
A subsidized loan’s interest rate is partially covered by the federal government, resulting in a lower interest rate than an unsubsidized loan.
If you need more information, by all means visit your financial aid office when it opens. Don’t be shy about asking them for information. That’s what they are paid for!
Also, this link may answer many of your questions:
http://studentaid.ed.gov/types/loans/subsidized-unsubsidized
Chris asks…
Can you have a co-signer on a section 502 USDA Direct Loan?
I as considering applying for a loan from the USDA. My credit isn’t bad, but it’s not great either. Can I have a co-signer?
The reason I ask is because I’m disabled and currently only getting 700 a month. But the only thing i spend this on is rent and basic things like electric water etc etc. I’m paying 300 just for a small room to rent. I contacted the USDA they sent me this large packet to fill out. I was just wandering if it was worth my effort or not. I live in very rural are in Kentucky and you can buy places at very reasonable rates. When you say the subsidize the loan do they count that when figuring how much you could pay back. For example if i found a home for 40,000 and payments were 250 with the 5 percent interest, would the government pick subsidize part of that payment ? Thanks for the info.
Nagesh answers:
USDA Direct loans (or section 502) are for very low income buyers in rural areas, and are subsidized; meaning that the USDA actually covers a portion of the mortgage payment each month and you pay it back when you sell or refinance.
If you are low income, then even with not so good credit, you most likely will not require a co-signer. The co-signers income might put you above the income level.
Here is a link to the USDA website:
http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state&NavKey=income@11
Maria asks…
Financial Aids help. Direct Sub Stafford Loan ?
I have no idea if there is interest for Direct Sub Stafford Loan 1. Can someone help me 🙁
Nagesh answers:
The govt will pay the interest while you are in college on a subsidized Stafford. When the loan goes into repayment which is beginning 6 months after you graduate, quit or fall below half time then they start adding the interest on the balance of the loan
Undergraduate students:
• For loans first disbursed on or
after July 1, 2010, and before
July 1, 2011: 4.5%
• For loans first disbursed on or
after July 1, 2011, and before
July 1, 2012: 3.4%
• For loans first disbursed on or
after July 1, 2012: 6.8%
Graduate students: 6.8%
I got those interest rates from this great site. Check it out: http://studentaid.ed.gov/students/attachments/siteresources/Funding_Education_Beyond_HS_2011-12.pdf
Thomas asks…
unsubsidized direct stafford loan? how does it actually work?
i just got an email from my community college that i have been awarded a unsubsidized direct stafford loan. The award letter says that i will receive $1,750 for the upcoming spring semester. This will really help because tuition for full time student at my college is $1,500 and i will be able to spend the remaining money on books.
I did a little research online and i found out that if i got a subsized loan, i would not have to pay intrest. But since i got an unsubsized loan i do have to pay interest.
I was wondering if there was anyone out there who had used this unsubsidized loan, and if so do you reccomend it? and how is the payment plan? do i pay intersest every month until i totally repay the loan? and if so how much intrest would i have to pay for a $1,750 loan?
sorry if i sound ignorant but i have no idea how this whole thing works and my college advisor wont reply to my emails
Nagesh answers:
No you do not sound ignorant at all, you sound just like all of us when we first went through the same thing.
Yes federal loans like subsidized and unsubsidized, parent etc loans are all good. They have great interest rates and terms and flexible payback. If you have to get a private loan for college which some do those are from banks and lenders and are no where near good as this. Http://www.gocollege.com/financial-aid/student-loans/benefits-of-loans.html Many students have these loans.
Unsubsidized means from the time you get the loan the interest will start adding up while you are in school. Its not a lot of money the interest, 2.79 a month. You cannot pay the interest ahead of time. I called the Stafford office and was told you cannot pay it ahead of time and they recommend you pay it yearly.
You just want to pay that interest before you go into repayment on the loan. You start to repay Stafford loans 6 months after you graduate college, quit or fall below half time. Otherwise they will add all that interest to the amount of your loan and then you will have to pay interest on that higher amount, so you want to pay the interest before you have to repay the loan.
Your school will have a disbursement date for federal aid, which is a date all student will get their financial aid deposited into their college accounts. Your school will take their charges for tuition, meals, fees, housing. Then you will be refunded the difference by check or card system depending on your school.
We applied FAFSA Jan 1, got our federal aid in our college account 8-25, school started 9-1 and we got our refund 1 week after school started by card system.
Congratulations and have fun in college.
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