Hey everyone,
So, I just accepted my college offer and am finalizing my financial aid package. I saw that they included some unsubsidized loans to help cover the costs. I understand I’ll be responsible for paying them back eventually, but what about interest?
Do unsubsidized loans accrue interest while I’m still in school? I’m worried the debt will just keep snowballing before I even graduate.
Any clarification would be a huge help…
Hello there,
Well done on accepting your opportunity to attend college! Unsubsidised loans do indeed charge interest while you are enrolled in classes. This implies that interest accrues from the time the loan is disbursed and will be capitalised (added to your principle debt) at graduation or in the event of a deferment if you fail to pay the interest throughout your academic term.
If you can, you should think about managing this by making interest-only payments while you are enrolled in classes. By doing this, you can avoid having your loan debt balloon before you begin making consistent payments.
I hope this is useful, and best of luck with your coursework!
Yes, unsubsidized loans do accrue interest while you are in school. Unlike subsidized loans, where the government pays the interest while you are enrolled at least half-time, with unsubsidized loans, the interest starts accumulating when the loan is disbursed. If you don’t pay the interest while you are in school, it will be added to the principal amount of your loan, which means you will end up paying interest on a larger amount after you graduate.
If your loans are unsubsidized, you’re responsible for all the interest that accrues, even while you’re in school. Learn about the differences between subsidized and unsubsidized loans.