How exactly do student loans work?

Question

I am a junior in college and just not sure how student loans work.

So far I have paid for all if my college straight out.  From what money I saved before college and working over the summers.  This next semester I am going to be a little short.  I won't be too short but may need $500 or so.

Can I take out a student loan for $500 and pay it off this summer?  Will I pay interest?  Is there a better way to get a $500 advance?  I don't know if any family members will give me the $500 or so loan.

april ludgate · Answer

Yes, you can take out a $500 loan.
Whether or not it gains interest depends on what kind of loans you qualify for.

Subsidized does not gain interest at all until you finish college.
Unsubsidized does gain interest everyday.  Like, my interest on one loan is 6.8%
That 6.8% is spread out into 365 days of the year.
The interest rate varies.  I have 2 loans (my university does not lump the loans together in 1 loan. I have a loan for one year and a loan for this year.)

If you can pay it back within a reasonable amount of time, the student loan isn'tt that bad.

The reason they get a bad rep is the fact some students, like me, HAVE to take out loans.  We have no other options aside from not going to college.
BUT many others have extremely expensive colleges they're attending.  Larger loan = much, much more interest incurred.

Ideally, you should be paying off the loan little by little throughout the year, not just when you finish college; especially for unsub.

Anonymous · Answer

You dont need to pay the loan until after you graduate. Of course you will pay interest, that's how loans stay profitable. You can pay off as soon as you want to. If you can, try to find another way to get that $500, its not really that much - I mean considering how much tuition normally is.

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How exactly do student loans work?

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