Question 22.92

62. The simple interest rate on a federal PLUS loan was 6.84% for 2015-2016. There was also a loan origination fee of 4.292%, so you receive as proceeds only of the loan amount. Assume that your parents make interest payments until repayment starts and then repay with fixed monthly payments over 10 years. For the equivalent no-fee loan:

  1. What is the APR?
  2. What is the EAR?