I'm a college junior and I'm trying to understand how much interest I'll be paying off upon graduation.
I think there are a lot of college grads in here who probably have been in my shoes :)
Total aid based on 6 semesters:
Perkins Loan: $4600
DL Subsidized Loan: $9,032
DL Unsubsidized Loan: $2,736
Other Aid Info:
SEOG: $4000
Pell: $9,692
Merit: $10,500
Scholastic Grant: $24,600
Other Scholarships: $13,000 The grants and scholarships are not repaid. Those were gifts, in some cases because you were judged to have significant financial need, and in other cases to reward you for your academic success and academic potential. So - that $70-something thousand dollars will never be repaid.
As for the loans - let's take a look.
The Perkins Loan is a fixed rate loan carrying an interest of 5%. That's the lowest interest you can get on any federal government loan, so you're off to a good start. The Perkins is also a subsidized loan, which means that the government will pay all of the interest that accrues on this loan while you're in school, and they'll continue to pay the interest for the 9-month grace period that you're allowed before you must begin to repay the loan, after finishing school.
As far as the Perkins debt, then, when the repayment period begins, you'll owe exactly the amount you borrowed: $4600.
The same holds true for your subsidized Stafford - the $9032 that you quoted above. The government has promised to pick up the interest until you start repaying the loan, 9 months after finishing school. These will be a little bit trickier to figure out the eventual payment, because it will depend on when the loans were dispersed.
For this coming school year (2008-2009), the government has lowered the fixed interest rate on newly disbursed standardized Stafford Loans to 6.0%. Note that this is not retroactive - it only applies to loans that you are awarded for the 2008-2009 academic year. Your older loans will still carry the same rate that they were written with.
From July 1, 2006 until June 30, 2008, the fixed rate on subsidized Staffords was 6.8%.
Prior to July 2006, Stafford loans were adjustable rate loans, so if you've got any of those, then you're really in for a challenge trying to predict the eventual payment on those - the interest rate on those old loans will continue to readjust, based on the rate on 91-day Treasury bills (with a maximum cap of 8.25% or less).
As for the unsubsidized Stafford - the fixed interest rate on those is 6.8%. That's been the case since 2006, and the government has announced that they'll continue to make those loans at 6.8% for the next several years to come.
Unsubsidized loans are more complicated to calculate, because unpaid interest begins to accrue from the day that these loans are disbursed to you. As the interest accrues, your balance edges up every month, so more interest accrues in month 2 than in month 1, and on and on, until you eventually begin to pay down the loan 9 months after you finish school. In fact, your initial payments will represent nothing more than paying off the accrued interest - you won't get into principal payback on these loans for a little while.
For the Perkins - there's a 10-year maximum repayment period, but you must pay a minimum of $40 a month. You would pay off this loan with 112 payments of $40 each, which would represent a total of $4521.43 , including $921.43 worth of interest.
Assuming, for the sake of argument, that all of your subsidized Staffords were at 6.0% interest (they're probably not, because some of them are probably 6.8%), you would pay APPROXIMATELY $93 a month for 120 months, a total of $11,160.
Throw in your unsubsidized Stafford, and I'm going estimate that your total monthly payment on all 3 types of your loans will be in the neighborhood of $175 a month for 10 years.
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