Interest on student loans typically begins to accrue when the loan is disbursed, or paid out to the borrower. This means that interest will start to accrue on your student loans as soon as you receive the funds, regardless of whether you are in school, in a grace period, or in repayment.
Most student loans have a fixed interest rate, which means that the interest rate does not change over the life of the loan. The interest rate on your student loans will be determined by a variety of factors, including the type of loan, the borrower’s credit history, and the borrower’s enrollment status.
Some student loans, such as Direct Subsidized Loans, have a temporary period of interest-free deferment while the borrower is in school. This means that the borrower is not required to make payments on the loan while they are in school, and the government will pay the interest on the loan during this time.
Other student loans, such as Direct Unsubsidized Loans, do not have an interest-free deferment period, and the borrower is responsible for paying the interest on the loan from the time it is disbursed. If the borrower does not pay the interest as it accrues, it may be added to the loan balance (a process called capitalization), which can increase the overall cost of the loan.
It is important to understand the terms of your student loans and to make timely payments to avoid accruing additional interest or having your interest capitalized. If you are having trouble making your student loan payments, you may be able to work with your lender or servicer to find a solution.