Galvin is graduating from college in eighteen months, but he will need a loan in the amount of $9,875 for his last three semesters. 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 at the time of repayment and by how much?
- The Stafford Loan has a higher balance by $164.22.
- The Stafford Loan has a higher balance by $212.79.
- The PLUS Loan has a higher balance by $227.06.
- The PLUS Loan has a higher balance by $604.07.