The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: Retirement, college, and Obamanomics||Date: 1/1/2013 1:05 PM|
|Author: 2gifts||Number: 71166 of 75340|
For some reason, I thought that interest did not start accruing till the student graduated.
There is a difference between subsidized and unsubsidized loans. I did a quick Google search, and found this:
Essentially, subsidized loans work like you thought where the interest is paid by the federal government while the student is in school, and so the portion the student pays does not start to accrue until after graduation. These loans are based on need, and were probably what you had in school and were certainly what I had in school. Unsubsidized loans, which is most likely what your kids would get and would have been what my kids would have taken out, have the interest accrue from the date of borrowing, and the student is responsible for all of the interest, although payments are not due until graduation. It's for this reason that I did not want my kids to have to take out loans. Instead, they are responsible for books, spending money, car insurance (they drive our vehicles) and gas, which seemed like enough skin in the game for us.
We also opted to pay for 4 years at any school of their choice, and they did know that while looking. Where you are planning on funding 4 years of a state school, I would just suggest that you make sure that they know that early enough so that they can plan for that, and if they need to do things like get a job to save up or work extra hard on their grades or whatever, they will know that and can take appropriate action.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|