CAPITALIZATION AT REPAYMENT

Unsubsidized Stafford and PLU.S. interest is NOT added to principal by U. S. Bank until repayment begins. This represents customer advocacy by capitalizing at repayment vs. monthly, quarterly or yearly. An eye-opening example is a student graduating with a $17,000 loan balance. First, here are the assumptions used: The rate stays at 7.43% for the entire four years the student is in school; the first year loan amount is for $2,625; the second year loan is for $3,500; the third year loan is for $5,500 and the fourth year loan is for $5,375. We compared a quarterly capitalization vs. once at repayment, and we assumed repayment would not begin until 6 months after graduation. The result is that capitalizing once at repayment saves $298.89 over capitalizing quarterly...BUT, as the student must then repay that extra amount over the life of the loan (120 months), the interest on that additional $298.89 adds up to $126. Thus, the total additional cost to the student by capitalizing quarterly vs. once at repayment is $298.89 + $126 or $424.89.

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