A= the amount you owe on the loan total; P=Principal; r = fixed annual interest rate (represented as a decimal); n = number of years.
We studied the difference between government subsidized loans and government unsubsidized. The federal government pays the interest on subsidized loans during periods of authorized deferment, such as the in-school and economic hardship deferments. The interest remains the responsibility of the borrower on an unsubsidized loan. This makes subsidized loans a less-expensive option for students. Bank loans are not funded by the federal government but are funded by banks and other lenders; they do not have as flexible payments as federal loans. If I went to school for 4 years and borrowed $5,000 each each totalling $20,000 I could find out how much money I needed to pay monthly until I payed off the loan using the equation: A=P(1+r)^n.
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April 2015
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