Garrett is graduating from college in twelve months, but he will need a loan in the amount of $6,785 for his last two semesters. He may either receive an unsubsidized Stafford Loan with an interest rate of 6.8%, compounded monthly, or his parents may get a PLUS Loan with an interest rate of 7.8%, compounded monthly. The Stafford Loan has a grace period of six months from the time of graduation. Which loan will have a higher balance at the time of repayment and by how much?

Question

anonymous · Answer

A. The PLUS Loan has a higher balance by $72.54.

B. The PLUS Loan has a higher balance by $112.83.

C. The Stafford Loan has a higher balance by $177.86.

D. The Stafford Loan has a higher balance by $250.40