FAFSA first-timer asking about $40,000 loan interest rates over 3 years

You need to understand that FAFSA itself isn't a loan - it's just the application that determines what aid you're eligible for. For federal student loans, your interest rate depends on the specific loan type. For the 2025-2026 year, Direct Subsidized/Unsubsidized loans for undergrads have a 6.5% fixed interest rate, while PLUS loans are around 8.05%. Over 3 years, a $40,000 loan at 6.5% would accrue roughly $7,800 in interest if you don't make any payments while in school. But remember that with subsidized loans, the government pays your interest while you're enrolled (if you qualify based on financial need).

ya i got confused too my first time lol. fafsa is just the form that tells the govt how much money u can get. the actual $ comes from the dept of education. interest is yearly btw

Just to clarify what others have said: FAFSA (Free Application for Federal Student Aid) is the form you submit to determine eligibility for federal financial aid. After you submit it, you'll receive a Student Aid Index (SAI) that helps determine what aid you qualify for. For federal student loans, here's what you need to know: 1. Interest rates are annual (not total) and fixed for the life of the loan 2. Direct Subsidized loans (best option) don't accrue interest while you're in school 3. Direct Unsubsidized loans start accruing interest immediately 4. The $40,000 figure is high for a single year - are you sure that's not for your entire program? 5. There are annual loan limits for federal loans (typically $9,500-$12,500 per year for independent students) If you need $40,000 for one year, you'll likely need a combination of federal loans and possibly private loans, which have varying interest rates based on your credit score.

I HATE how confusing they make this process!!!! I filled out my FAFSA last year and got so messed up with all the loan types too. They literally expect everyone to understand all this financial jargon when most of us are just trying to get an education without going BROKE. The whole system is rigged to confuse people so they end up taking higher interest loans than they need to. 😡

I was in your exact situation a couple years ago! Here's the simple breakdown: - Subsidized loans (6.5%): government pays the interest while you're in school - Unsubsidized loans (6.5%): interest accumulates while you're in school - PLUS loans (8.05%): higher interest rate, available to parents or graduate students For a $40,000 total loan amount spread across your program, you're looking at roughly $2,600 in interest per year if unsubsidized. But remember, you don't have to take the full amount! Only borrow what you absolutely need. When filling out FAFSA, pay attention to: 1. Dependency status (at 25, you're independent) 2. Income reporting (accuracy is crucial) 3. School codes (make sure to list all schools you're applying to) 4. Deadlines (state deadlines may be earlier than federal) Hope that helps!

I tried calling the Federal Student Aid office to clarify the interest rates for my loans last month and kept getting disconnected. After trying for two days, I finally used Claimyr (claimyr.com) and got through in under 25 minutes. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ The agent explained everything about the different loan types and interest calculations. They also helped me understand what parts of the FAFSA application impact loan eligibility. Definitely worth having a direct conversation with them since loan details can be complicated.

Yes, federal student loans have origination fees that are deducted from the loan amount before disbursement. Currently, the fee is about 1.057% for Direct Subsidized/Unsubsidized loans and 4.228% for PLUS loans. To directly answer your original question about total costs: For a $40,000 loan over a 3-year program: 1. With fully subsidized loans (best case): You'd pay about $422 in origination fees, and $0 in interest while in school. 2. With unsubsidized loans: You'd pay about $422 in origination fees, plus approximately $7,800 in total interest over 3 years (assuming no payments while in school). Most students get a mix of subsidized and unsubsidized loans based on financial need, so your actual cost will likely be somewhere in between those figures. After graduation, you'll have various repayment options, including income-driven plans that adjust your payment based on your earnings.

Does anyone know if these interest rates are fixed forever or do they change? I took out loans in 2023 and I swear my interest rate was different.

Thanks everyone for all this info! I feel way less confused now. I'm going to: 1. Submit my FAFSA asap 2. Try to qualify for subsidized loans 3. Only borrow what I absolutely need 4. Watch out for those origination fees I'm still a bit nervous about the whole process but this helped a ton!