Private College Student Loan

How does a Federal Direct Subsidized Loan (William D Ford Loan) work?

"The William D. Ford Federal Direct Loan program is available to undergraduate, graduate, and medical students based on financial aid eligibility. The federal government will pay interest on this loan while you are enrolled in college at least half-time. The application will not be processed through a bank, but rather through UCI and the U.S. Department of Education. The guarantee and origination fee will be deducted from the loan amount you borrow. You will be charged a 1.5-percent origination fee. A rebate of 1.0 percent of the loan amount will be included in each disbursement. If you advance a grade level during the academic year you may be eligible for a higher maximum annual loan limit. Otherwise, you must wait until the period of time equal to an academic year elapses to borrow again under the William D. Ford Federal Direct Student Loan Programs (subsidized and unsubsidized). Interest Rates for Undergraduate students are fixed at 5.6 percent. Interest Rates for Graduate/Professional students are fixed at 6.8 percent." Can someone clarify this for me? Let's say I borrow $3000.00, what will be the outcome?

Public Comments

1. If you borrow 3000, then first they take out some fees and then the government covers your interest while you are a student, so unless you wait after you have graduated or whatever, you only owe back the 3000. If you take time after you stop being a student to pay the loan back, you also have to pay 5.6% interest per year after graduation beyond the 3000.