Question

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What is the primary advantage of the subsidized Stafford Loan over the Unsubsidized Stafford Loan? What...

  1. What is the primary advantage of the subsidized Stafford Loan over the Unsubsidized Stafford Loan?
  2. What are the 2 primary advantages of Stafford Loans over PLUS loans?
  3. What is the primary advantage of the PLUS  loan over the Stafford loan?

Solutions

Expert Solution

(a) Primary advantage of subsidized Stafford Loan over Unsubsidized Stafford Loan is that in subsidized Stafford Loan goverment pays the interest on your loan while you're in school, during the six-month grace period after school and during a period of deferment if you are having financial trouble after graduation,While in Unsubsidized Stafford loans accrue interest while in school, during grace periods and deferment periods. Students are having an option of not paying accumulated interest during these periods, but if you choose not to pay, it will be added to the principal amount of your loan.

(b) Two advantage of stafford loans over PLUS loan

(1) The interest will not begin accruing until after the student graduates from college under stafford loans.

(2) In stafford there is no need for students to pass any standard credit check like in case of PLUS loans.

(c) Primary advantage of PLUS loan over stafford loan is that PLUS loans offers low-interest amount that goes towards paying the cost of college. Unlike a Stafford loan, the funds from a PLUS loan are paid directly to the parents of the student even though the money is being borrowed on behalf of the student.


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