- name: unsubsidized Stafford Loan
- interest rate: 6.8%
- interest type: unsubsidized
- maximum repayment term: 10 years
- grace period: 6 months
- maximum loan amount: $42,722 per year ($224,000 total)
No Advantages of Unsubsidized Stafford, Just Disadvantages
This loan is the starting point of when medical school loans will start to bite you if you are not careful, just because you can borrow so much of it (up to a total amount of $224,000). When compared to the max amounts you can borrow for the Perkins or subsidized Stafford, the max amount for the unsubsidized Stafford blows the other two out of the water. In fact, its more than the other two loans combined. Most likely, it will make up the bulk of your medical school loan.
What Is Unsubsidized?
Unsubsidized means the interest rate starts accruing (daily) once you take the money. At an interest rate of 6.8%, it will start adding up fast. I have been in school for only 3 semesters so far and I have already racked up more than $3,000 in interest from the unsubsidized Stafford Loan. In the next two years, I can expect the interest to increase as I take on even more unsubsidized loan to further fund my education.
Not Everyone Will Qualify for the Loan
This is a needs-based loan. But most people will be able to qualify for it. And if you don’t qualify for it, you could already easily pay for medical school. There are some Caribbean medical schools which are ineligible for this. If you are in that boat, the best option for you would be the Grad Plus, which is even more expensive.
Who Should Take Out the Loan?
Do not get this loan until you have maxed out on the Perkins and subsidized Stafford. But for most people, this loan just cannot be avoided because medical school is just so expensive. The good news is that for most people, they will not need other loans beside the Perkins and Stafford. Because believe me, there are worse options out there.
This article is part of the Medical School Loans series. Click on the link if you want more tips and hints about borrowing money smartly.