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Financial Aid / Re: Unsubsidized Stafford Loan - pay interest while in school?
« on: July 14, 2007, 09:54:03 PM »
qmmm is correct. For example, my lender allowed sends me a notice (not really a bill) showing the accrued interest every 3 months even though I opted NOT to pay interest while in school. I can pay it or choose not to. Essentially, any payments I make while in law school is put towards any interest I've accrued. However, I don't have to send them a dime since I opted not to pay interests.
of course, i can't say this is the same with ALL lenders. My lender is MEFA.
of course, i can't say this is the same with ALL lenders. My lender is MEFA.
I could be wrong, but you're also not losing anything by saying yes to paying interest payments while in school. It gives you the option to, but you are not under obligation to do so. So if you change your mind and don't pay or don't pay for a particular month, it has no effect on you than if you had said no from the get-go.
I'm not sure that you can claim that you are 'not under obligation' to make the interest payments. I suspect that this is strongly dependent on the particular lender and you may be obligated to pay or suffer some sort of penalty. I further suspect that for private loans, especially those that tie your interest rate into your repayment plan, you would be obligated to pay on time.
Besides, if you say that you won't be making interest payments while in school, you certainly are 'not under obligation' to pay. However, the lender will always accept payment. In fact, most loan agreements that I have investigated contain a clause that if you return part of a loan payout within 120 days from the time of issuance, it will be as if you had never taken out the money in the first place. That is effectively a 4 month interest free loan for the portion returned.
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