Emmett is graduating from college in six months, but he will need a loan in the amount of $2,350 for his last semester. 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 and by how much at the time of repayment?
A. The PLUS Loan has a higher balance by $25.12
B. The PLUS Loan has a higher balance of $71.73

Question

Emmett is graduating from college in six months, but he will need a loan in the amount of $2,350 for his last semester. 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 and by how much at the time of repayment?
A. The PLUS Loan has a higher balance by $25.12
B. The PLUS Loan has a higher balance of $71.73

anonymous · Answer

Correction for the answer choices
A. The PLUS Loan has a higher balance by $25.12
B. The Stafford Loan has a higher balance by $71.73
C. The PLUS Loan has a higher balance by $125.80
D. The Stafford Loan has a higher balance by $158.54