lawschool22 wrote:aboutmydaylight wrote:Am I wrong in thinking that the quarter system is much more favorable to student loans than the semester system? Not only does semester start about a month before quarter system, but you also have to take out more money up front because its divided by 2 instead of 3. That seems to be a pretty significant difference.
For example, assuming you start at the beginning of August and take out the max $20,500 in Stafford loans, that means $10,500 per semester. Second semester starts at the beginning of January. By the beginning of August next year you've had 12 months of interest on the first part of the loan, and 7 months of interest on the second part of your loan. With an interest rate of 5.41%, that's 5.41% * 10500 + (5.41%*(7/12)) * 10500 = 568.05 + 331.36 = $899.41 in interest.
For quarter system, its $6833 per quarter, in September, January, and April. That means by August of next year (assuming your big law job starts at the same time regardless of semester/quarter), you'll have 11 months on the first part of your loan, 7 months on the second part, and 4 months on the last part of your loan. Again, that's (11/12)*5.41%*6833 + (7/12)*5.41%*6833 + (4/12)*5.41%*6833 = $677.719 in interest. That's significantly lower.
Or am I making a wrong assumption about how loans are distributed?
I didn't check your math but I don't really consider $220ish differential to be significant when we're talking about $100-$200k loans
Well that's only for 1 year of loans, and that's only for $20,500 in Stafford loans, and that's before the loans capitalize. I haven't calculated the difference over repayment but it could easily turn out to be ~10k or so.