But I didn't borrow that much...
In the past when you've borrowed money from your parents or friends, chances are you've paid back exactly what you borrowed. When you begin to pay back your student loans, you might wonder why do you owe more than what you borrowed?
One answer is interest. Interest is what the lender charges to use their money. When you receive the loan, you will be told of the interest rate. Although the rate may differ for various lenders, the federal government sets a maximum cap for interest rates. The rate is adjusted every July 1st.
The other reason you pay back more than you borrowed is the fees charged by the various players in the process that must be deducted from the loan amount before you get the check. These fees often include the origination fee and insurance fee. If you have any concerns, be sure to ask your school's financial aid office to clarify what fees your lender will deduct.
- Paying for college
- Financial aid
- About financial aid at NMU
- How much did I borrow?
- Know ahead