Options for education loan

Question

A certified financial planner notes that with an unsubsidized student loan, the borrower has the choice of whether to make interest payments on the loan while still in college. She advises that making the interest payments rather than postponing them until after graduation is "always to your financial benefit ... because otherwise the interest payments will capitalize" (a) (b) Why does she believe that making the payments would be to your fi- nancial benefit? Are there good reasons some students decide to postpone making the interest payments until after they graduate? Briefly explain. What does the financial planner mean when noting that the interest payments will "capitalize"?

Answer 1

Question

Chapter 7, Problem 1FPE

Summary Introduction

To explain: Options for education loan

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

A certified financial planner notes that with an unsubsidized student loan, the borrower has the choice of whether to make interest payments on the loan while still in college. She advises that making the interest payments rather than postponing them until after graduation is "always to your financial benefit ... because otherwise the interest payments will capitalize" (a) (b) Why does she believe that making the payments would be to your fi- nancial benefit? Are there good reasons some students decide to postpone making the interest payments until after they graduate? Briefly explain. What does the financial planner mean when noting that the interest payments will "capitalize"?

REFLECTING Should Jill consider a payday loan to purchase the refrigerator? Explain. Hint APR means annual percent rate. 2. Jill is buying a new refrigerator. She cannot afford to pay cash. Should she use a credit card or get a personal loan? Justify your answer. 3. Liam, a taxi driver in Revelstoke, wants to buy a new taxi. He was approved for the loans in this chart. a) What should Liam think about when he chooses a loan? should Choose the Lost Fixed APR payments for 4 Apprenticeship and Workplace 11 secured personal 5.5% loan auto loan 7.5% b) Which loan should Liam choose? Explain why. 4 yr 6 yr 4. Hannah says that using payday loans and cash advances on credit cards are bad choices for borrowing money. Do you agree or disagree? Explain. NEL

Scenario 2:Saving for collegeYou are a freshman in high school andhave your eye on a college degree. Butcollege is expensive, especially sincethe costs include tuition, food, livingexpenses, travel and books.What financial information do youneed?What financial decision-makingstrategies can you use?(Cost comparison, cost-benefitanalysis, calculating future expensesor budgeting?)