There are several different types of loans you can get when it comes to paying for college. There are private loans (from banks/credit unions), and government loans, which can be subsidized or unsubsidized. Government subsidized loans mean that you don't have to pay the 3.86% interest rate until after you graduate. Unsubsidized means that you pay interest while you are going to school, which is also set at 3.86%. A big advantage to government loans is that the interest rate is much lower than private loans, but the money is strictly for college use. When you get a private loan, the interest rate is higher, but can be used for more than one thing. If I were to get a $5000 subsidized loan for all 4 years of college, I would owe $20000 and have to pay 3.86% interest after I graduated. If I chose to pay off the loan in 10 years, the equation for this would be A= 20000( 1+.0386)^10. "A" would then equal $29,208.76 and when divided by the number of months in 10 years (120), would give me the amount of money I would pay my student loan back per month, $243.41.
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