RFF

Ok my financial aid report came in today and it does not look good. Last year I received pell grants and a decent sized stafford loan. Well, for some reason this year my stafford loan only comes to less than $400, I will not be getting any pell grants either, but can get a large unsubsidized loan. I know with an unsubsidized loan the interest builds but how is the interest compounded? I just don't want to take these loans and end up being screwed with a ton of interest.

archemedes

Interest begins to accumulate from the date of the first loan disbursement and is billed quarterly. Students may choose to pay the interest that accumulates or have it capitalized. Paying the interest as it accumulates will reduce the amount of interest that must be repaid. A 3% origination fee is deducted from the loan before it is disbursed.
from:
http://bingfa.binghamton.edu/directun.htm

RFF

So at what percent will the interest be compounded at and is it a set rate?

archemedes

Interest Rate for Federal Direct Unsubsidized Loans

IS...
#
Currently 2.77% (in-school & grace period)
# Currently 3.37% (repayment period)
#
Variable
#
Based on the 91 day Treasury Bill auctioned at the final auction held prior to each June 1st
#
Adjusted July 1 each year

NOTE: This interest rate will never exceed 8.25%

RFF

One last question, you said 3% of the loan is used for some sort of processing. So I subtract the 3% before I find out my interest payments? I'm 99% sure I would subtract the 3% before I just want to make sure.

archemedes

nope 3% comes off for fees so it's interest bearing

RFF

That sucks, still I will only be paying $48 a quarter unless interest shoots up.