Loan Question

[dna9488]

I am filling out my loan paperwork, and there is a question that says, "Capitalize my Interest?" Here is the description of what the application told me:

What is Capitalization?

Capitalization is a process whereby a lender adds unpaid interest to the principal balance of a loan. You are responsible for paying the interest due on an Unsubsidized Federal Stafford Loan from the date the lender disburses the loan until the loan is paid in full.

If you are granted a deferment (on an Unsubsidized Stafford Loan) or forbearance and if you choose to defer and capitalize interest charges, the principal balance of your loan will increase each time your lender capitalizes unpaid interest. As a result, you will pay more interest charges over the life of the loan. When you leave school and begin repaying your loan, your monthly payment amount will be higher or, if your loan is subject to the $50 minimum payment, you will make more payments.


I don't know what it means, can anyone help me out, please???

[coffee-guy]

EXACTLY what it says - try reading it slower and maybe you'll figure it out...

[dna9488]

EXACTLY what it says - try reading it slower and maybe you'll figure it out...

still don't get it, lol.

[coffee-guy]

still don't get it, lol.

Try reading it outloud then....

[dna9488]

Try reading it outloud then....

lol...i sort of get it, i just need someone to put the final touch on it.


To me it sounds like a good thing, but when you defer your payments, you're screwed, and i do plan on deferring my payments, so i don't think its right for me.

[The_Grinder]

Do you plan to make payments while in school? If so, then do not capitalize. If not, then capitalize.

[dna9488]

Do you plan to make payments while in school? If so, then do not capitalize. If not, then capitalize.

Yeah i do actually, but like $10-20 a month, lol.

That little builds up in the long run

[The_Grinder]

Yeah i do actually, but like $10-20 a month, lol.

That little builds up in the long run

I think the minimum is $50 a month isn't it?

[dna9488]

I think the minimum is $50 a month isn't it?

no, its $50 plus some fees and shit....the fixed interest rate for me is 6.80%

[The_Grinder]

no, its $50 plus some fees and shit....the fixed interest rate for me is 6.80%

How are you going to make payments of $10-$20 if the minimum is $50 plus some fees and shit?

[dna9488]

How are you going to make payments of $10-$20 if the minimum is $50 plus some fees and shit?

ya i know i can't, after i read some more shit. I am going to talk with my counselor on monday, and he said to fill out an application, and that was one question on it.

[Mr I]

basically what its saying is that if you borrow 10,000 at 10% interest per year, then if you pay it back over one year, the total amount is 10,000 plus 10% interest so 10,000 plus 1,000 = 11,000.

The capitalised interest there is 1,000 and the loan plus capitalised interest is 11,000 and that is the total repayable amount which will be divided into monthly installments so in this case 11,000 divided by 12.

[dna9488]

basically what its saying is that if you borrow 10,000 at 10% interest per year, then if you pay it back over one year, the total amount is 10,000 plus 10% interest so 10,000 plus 1,000 = 11,000.

The capitalised interest there is 1,000 and the loan plus capitalised interest is 11,000 and that is the total repayable amount which will be divided into monthly installments so in this case 11,000 divided by 12.

Oh, i see what you mean, thanks man

[FrankTheTank55]

Just sign it...