Pretty basic student loan questions

[andorus]

I'm struggling with finding a place that really spells this all out, and this has been such a wonderful resource. I have a bunch of questions and really would appreciate any help you all can provide

Comments

[lotuslion]

The origination fee is exactly what you thought it is - they take it out of the total loan, so it's not added on top of it. So if you take a $5000 loan, you're actually only going to get around $4850. The default fee is something they charge to everyone I believe - I'm not totally sure what it is, actually, but they also take it out of the loan amount upfront (...I think. When I shopped for loans, these fees were all pretty much the same rate, so I just applied for what I needed and I don't remember how it all shook out.) But yes, you want to find companies with the lowest origination/default fees and best reduced interest rate incentives (although in my experience, they all are pretty much the same

[andorus]

Thank you so much! That is really helpful. :) When you say they take it out of the total loan, though...I'm going to have to take out a Stafford and a Grad PLUS, so will I really be taking out less than the max $20,500 Stafford amount because of this fee?

Thanks again!

[lotuslion]

Heh, no, you're still responsible for what ever amount you request - so if you request the full $20,500 Stafford loan amount, that's what you have to pay back. The fees just affect how much gets disbursed to your school to pay your tuition, fees, living expenses, etc. So in the example I gave before, if you request $5000 from the lender in Stafford loans, you still have to pay back $5000 principal, but only $4850 is disbursed to your school. I suppose it's better than them adding the fees on top of the principal, but it's still something to keep an eye on. I've just borrowed whatever I needed to meet my cost of attendance after my scholarships, and I've never had a problem with the fee amounts shorting my loans so much that I can't pay tuition or rent or anything.

[shydescending]

seems you got some help with the terminology already but I just wanted to say that Great Lakes holds most of my loans and although I wouldn't say loans in general are a stellar experience, so far they've been totally hassle-free. :)

[andorus]

Cool--that's good to know. :) Thank you!