Stafford Interest Rates

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Stafford Interest Rates

Postby cmoney » Wed Apr 01, 2009 9:01 pm

How often is the interest compounded on the sub and unsub Stafford loans?

I read the examples on this page (http://www.staffordloan.com/stafford-lo ... t-loan.php) and cannot get the same numbers when trying to compute it on my own.

I've read in a couple of places that the interest is computed daily, monthly, and no more than quarterly. (Obviously three different answers.) Daily makes little sense to me while monthly/quarterly don't give me the correct result.

If you could tell me how often it is compounded and, if possible, some quick and dirty formulas with numbers to help me understand how they are arriving at the final result, that would be great.

Thank you so much.
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Re: Stafford Interest Rates

Postby Ms. Stafford » Thu Apr 02, 2009 9:26 am

hello, thanks for your post. The page you referenced in your post was outdated. Thank you for bringing it to my attention. Check it out now, and see if that makes more sense to you.
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Re: Stafford Interest Rates

Postby mharr » Sun Apr 26, 2009 3:55 pm

I have a question about example 2 in that link. How is accrued interest of 2286 dollars calculated? I can't get the numbers to work, using a 6.8% rate, no matter if I compound annualy, monthly or daily.

I will repeat the question asked by the first poster. How often are stafford unsub loans compounded. Simple question, but I can't find an answer.
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Re: Stafford Interest Rates

Postby Ms. Stafford » Mon Apr 27, 2009 6:30 am

hello, it is my understanding that on the Unsub Stafford loans, interest is compounded daily. So on a $6000 dollar loan @ 6.8% the interest accrued would be about $34 a month which translates to about $1.13 a day in interest.

I also want to thank you and the previous poster for bringing this issue to our attention because the numbers were incorrect.
http://www.staffordloan.com/stafford-lo ... t-loan.php

They should make sense now, and if they do not, please let me know.

~ Ms. Stafford
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Re: Stafford Interest Rates

Postby mharr » Fri May 01, 2009 5:37 am

I still think there is something wrong with the numbers on that link.

Example 1 says total interest for all time would be 2,285, but that doesn't include the interest you pay while in school to keep the loan amount at 6000. (34 dollars a month for 4 years is 1,632.)This puts total interest at 3917 for example 1, not 2285. This would make a lifetime payment of 9917 on a 6000 loan.

I compounded interest daily on the 6000 loan for 4 years and got 7875 and not 7632. (using simple compound interest formulas at 6.8 interest) A 10 year payment plan on the 7875 would result in a 10874 lifetime payment. If I did everything correct, you should be saving 957 (10874-9917) by using example 1.

I think it's pretty important for a website dedicated to financial aid information to get these numbers correct.
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Re: Stafford Interest Rates

Postby Ms. Stafford » Mon May 04, 2009 7:53 am

hello. Here is a link for a student loan calculator that gives me the same numbers as in examples 1 and 2. it may list it differently but the calculations are the same: https://www.slfc.com/slfcPresentationTi ... ateCapIntr

If you have any suggestions about how we can change the examples so it is easier to understand please pass them along.

Thanks
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