Alyssa may apply for an unsubsidized stafford loan with an interest rate 6.8%, compounded monthly and a grace period of six months from the time of graduation. Or, Alyssa may have her parents apply for a plus loan with an interest rate of 7.8%, compounded monthly. She will be graduating from college in a year and a half and needs a loan in the amount of $11,895. Which loan is the better choice and why?

****PLEASE HELP! show work/explain :) ****

Question

Alyssa may apply for an unsubsidized stafford loan with an interest rate 6.8%, compounded monthly and a grace period of six months from the time of graduation. Or, Alyssa may have her parents apply for a plus loan with an interest rate of 7.8%, compounded monthly. She will be graduating from college in a year and a half and needs a loan in the amount of $11,895. Which loan is the better choice and why? 

****PLEASE HELP! show work/explain :) ****

anonymous · Answer

A) The stafford loan is the better choice because it is $197.81 cheaper than the plus loan.
B) The plus loan is the better choice because it is $256.32 cheaper than the stafford loan.
C) The plus loan is the better choice because it is $454.13 cheaper than the stafford loan.
D) The stafford loan is better choice because it is $273.50 cheaper than the plus loan.