How does interest accrue on my student loans?

In California, interest accrues or is added to a student loan depending on the type of loan one has. For federal loans, such as Direct Subsidized, Unsubsidized and PLUS loans, interest begins to accrue when the loan is disbursed, or when the funds are released to the student. With some types of loans, such as the Direct Subsidized Loan, the government pays the interest for the student while they are in school. For the other types of federal loans, the student is responsible for the interest from the time of loan disbursement. For private loans, such as those from banks and other lenders, interest begins to accrue either when the loan is disbursed or when the borrower enters repayment, whichever is earlier. In some cases, the interest accrual may be deferred and the loan rate may be variable, depending on the terms of the loan. In all cases, the interest rate on a student loan will be stated in the promissory note, which is an agreement between the student and the lender. Most student loans have a fixed interest rate, meaning the rate will not change over the life of the loan. If the rate is variable, the rate can change depending on the terms of the loan. Overall, it is important to understand how interest accrues on your student loans so that you can take steps to pay off the debt as quickly as possible. It is also important to make sure you are on top of payments and to understand the total cost of borrowing.

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How does interest accrue on my student loans?

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