Answer: 5.78% APR, assuming there are no additional loan fees.
The Annual Percentage Rate (APR) represents the annual cost of borrowing, including interest and certain loan fees.
Step 1: Identify the information given.
Loan amount = $60,000
Annual interest rate = 5.78%
Loan term = 10 years
Repayment begins 2 years after graduation.
The student is financing the final 2 years of the chiropractic program.
Step 2: Understand the deferred payment plan.
A deferred payment plan allows the borrower to postpone making payments.
However, interest may continue accumulating during the deferment period. Any unpaid interest that is capitalized increases the loan balance and the amount the student ultimately repays.
Step 3: Determine the APR.
If the loan has no additional finance charges or origination fees, its stated annual interest rate is also its nominal APR.
Therefore:
APR = 5.78%
Final Answer: 5.78%
Important: Deferring payments increases the total interest expense, but it does not automatically change the contractual APR. If the problem expects an APR different from 5.78%, additional assumptions about loan fees, disbursement dates, interest capitalization, and repayment timing would be needed.
