When the government pays for the interest on a loan while you are in school, it is a government subsidized loan. You have to start paying as soon as you graduate, but the government pays while you are in school. In an unsubsidized loan, interest starts accumulating when you take the loan. Currently, government loans have an interest rate of 4.66%.
Bank loans are unsubsidized loans and also tend to have a higher interest rate.
You can find the total amount you will have to pay using the equation A=P(1+r/n)^nt. A=amount P=principal r=rate of interest n=number of times per year interest is compounded t=time in years
An example would be if you took out a $5,000 each of the fours years of college. This gives a total of $20,000. One plan would be to pay it back over 20 years. When the numbers are plugged in, the equation is A=20000(1+0.0466/1)^1*20. This is A=20000(1+0.0466)^20. When solved for A, the answer is $49,733. When paid once a month, the cost is $207.22 because there are 240 months in 20 years and 49,733/240=207.22.
Bank loans are unsubsidized loans and also tend to have a higher interest rate.
You can find the total amount you will have to pay using the equation A=P(1+r/n)^nt. A=amount P=principal r=rate of interest n=number of times per year interest is compounded t=time in years
An example would be if you took out a $5,000 each of the fours years of college. This gives a total of $20,000. One plan would be to pay it back over 20 years. When the numbers are plugged in, the equation is A=20000(1+0.0466/1)^1*20. This is A=20000(1+0.0466)^20. When solved for A, the answer is $49,733. When paid once a month, the cost is $207.22 because there are 240 months in 20 years and 49,733/240=207.22.