Interest on student loans generally starts accruing as soon as the loan is disbursed. For federal student loans , interest begins accumulating while the borrower is still in school. However, the government pays the interest on subsidized federal loans while the borrower is enrolled at least half- time, during the grace period, and deferment periods, so the borrower does not owe interest during those times. For unsubsidized federal loans and Direct PLUS loans, interest starts accruing immediately upon disbursement and continues through school and any grace or deferment periods, and if unpaid, this interest can be capitalized (added to the loan principal). For private student loans , interest typically starts accruing as soon as the loan is disbursed, but terms vary by lender.
In summary:
- Interest starts accruing immediately on all loans when disbursed.
- Subsidized federal loan interest is paid by the government while in school.
- Unsubsidized federal loans accrue interest during school, grace, and deferment.
- Private loans typically accrue interest from disbursement, but terms depend on the lender.
This means even while still studying, interest may be accumulating, especially on unsubsidized and private loans, increasing total repayment if not paid during school.
