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hi Megan...I'll be taking out the majority, if not all, of my loans through FAFSA. They have several loan options and the Federal Consolidated Loan does not charge an origination fee last I knew (I've checked their website, I'll give them a call after the holiday to verify). On several other types of loans it looks like the origination fee is anywhere from 2-3%. Here are my calculations even if I DID get nailed with the origination fee...hopefully someone will double check me:
I will need $9,000/yr to subsidize the stipend I will get. So $9,000 a year will be used and will not be collecting interest (it will collect some in reality as I won't be using it all at once, but for the sake of simplicity lets say it collects non whatsoever.)
I plan to take an additional $6,000/yr and deposit it in a Money Market Account. Lets say it takes in a 4.5% interest rate each year. The first year I will have made $270. So then add the interest plus another $6,000 for my second year, and I have $12,270 making 4.5% interest. This leaves me with $552.15 interest. Add that and my 3rd year's deposit of $6,000 and the total is now $18,822.15. Interest this year will be $846.99. Grand total going into my last year of school is $25,669.14 earning $1,155.11 in interest.
Now if I were charged 3% interest on a $60,000 loan, that will sap $1,800 from me. However I will have grossed $2,824.25 in interest, still profitting by $1,024.25. If I only took out my $9,000 a year, I would still owe just over a thousand for the origination fee, and that would come nearly all out of my pocket as extra.
Like I'm hoping however, there is a FAFSA loan with no such fee and I believe I qualify. Either way, if I am analyzing this correctly, it is in my best interest to take out the additional $6,000 and money market it until I hit my grace period and can pay back a large chunck with a little extra to boot.
I hope this helps and I also really hope that someone crunches the numbers I supplied and double checks me. I didn't do this as an undergrad, so hopefully I am not missing something crucial :/
Thanks for getting me to look into the origination fee Megan..I otherwise wouldn't have known to!!

Meghan*
Oh, and I am going for my PhD in clinical Psychology and the work I will be looking to do is research & publication. If I can't find placement at a University to do my research after so many years of schooling...I'm going to hurt someone!! ;)
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