Research Project
Prompt: If we take out a college loan of $5000 per year for 4 years, how long will it take to pay it back after college? What are subsidized loans, unsubsidized loans, and bank loans? What are current interest rates? How are payments and interest calculated?
- Time: approximately 20 years after
- Subsidized Loans: Government pays the interest for you during periods of deferment (less expensive).
- Unsubsidized Loans: The interest is applied immediately after loan is taken out, and loan gets interest put upon interest that is already on it (more expensive).
- Bank Loans: Provides help for long term finances, has a set interest and a set amount of time it is provided.
- Current Interest Rates:
Direct Unsubsidized Loans (Undergraduates)=4.29%
Direct Unsubsidized Loans (Graduate or Professional Students)=5.84%
Direct PLUS Loans (Parents and Graduate or Professional Students)=6.84%
- Payments Calculated: M = P * ( J / (1 - (1 + J)-N))
- Interest Calculated: X i(1+i)n/(1+ i)n – 1[9]