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Author Topic: Unsubsidized Government loan vs. Private Loan  (Read 769 times)

BrandonTexas

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Unsubsidized Government loan vs. Private Loan
« on: July 27, 2006, 03:45:06 PM »
Which is better?
Unsubsidized Government loan vs. Private Loan
My private loan offer came back at libor +3.5%

thenextstep

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Re: Unsubsidized Government loan vs. Private Loan
« Reply #1 on: July 27, 2006, 04:32:08 PM »
Usually the unsubsidized loan is still better, but if your private loan is fixed at an interest rate that you think is reasonable it can be fine that way. It looks like stafford interest rates will probably go up for a while, though eventually they will go down again.  Most of the time government loans are the cheapest interest rate you can find, but that's not always true.  Other than interest rate, I don't think it really matters all that much though I think there are other differences.  In general I have heard that once your loans are in repayment, the government loans help your credit score more than other loans (if you are on time and such)... but I'm not sure if that's true for all credit bureaus.

bass

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Re: Unsubsidized Government loan vs. Private Loan
« Reply #2 on: July 27, 2006, 05:24:17 PM »
Gov't loans I got are at 6.8.  Is libor like 5%?  If so, the interest rate is way bad. Plus libor + 3.5 is variable, whereas fed is usually fixed.

The gov't also offers lots of protection private doesn't.

Mr. Burnz

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Re: Unsubsidized Government loan vs. Private Loan
« Reply #3 on: July 27, 2006, 06:22:41 PM »
Definitely go with the unsubsidized Stafford loan.  The lowest rate I found for a private loan with EXCELLENT credit was LIBOR + 1.7% (~7.2%) variable which adjusts every quarter.  Interest rates will either be going up or staying flat over the next year, so you'd be much better off at this point taking the Stafford fixed at 6.8% until July next year.  And remember, you can only get 10k in unsubsidized federal loans in addition to the 8500 in subsidized funds.  So if you need more than this 18,500 then you'll HAVE to get a private loan...

PS: The 3-month LIBOR is currently 5.48%.  You can track it at Bloomberg here:
http://www.bloomberg.com/markets/rates/index.html

lask

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Re: Unsubsidized Government loan vs. Private Loan
« Reply #4 on: December 19, 2006, 05:26:39 PM »
don't forget to check your law school loan consolidation options.... www.studentbenefitservices.co m