How does interest accrue on my student loans?

Interest on student loans in Pennsylvania can accrue in two ways. The first is called ‘capitalized interest’ and is the amount added to the total of the loan when it is not paid. If the loan is not paid on time, the unpaid interest will be added on top of the loan’s principal and will accrue the interest rate for the loan. This means that the amount you owe will increase over time if it is not paid in full each month. The second way interest can accrue is by the addition of a loan fee or origination fee. The origination fee is an upfront fee that is added onto the loan and should be disclosed in the loan’s paperwork. This fee is typically a percentage of the loan amount and accrues interest just like the principal of the loan. The amount of the fee and the interest rate are both included in the loan’s terms and conditions. It is important to understand that interest continues to accrue on your student loans until the loan is paid off. To avoid additional fees and interest, it is suggested that loan payments are made on time and in full. Additionally, it is recommended that borrowers explore other options such as loan forgiveness or income-based repayment plans to help manage the burden of student loan debt.

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How does interest accrue on my student loans?

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