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Student loans can feel like a lifeline when you're chasing that degree, but the interest? That's the part that sneaks up on you if you're not paying attention. Knowing when your loans start piling on interest is key to managing your debt like a pro. Whether you've got federal or private loans, the timing varies, and we're breaking it all down so you're in the know.
For federal subsidized loans, you're in luck during school. These beauties don't start accruing interest until six months after you graduate, drop below half-time enrollment, or leave school-aka the grace period. "The government pays the interest while you're enrolled at least half-time," the U.S. Department of Education explains, covering you through that post-grad buffer too. So, if you're juggling classes and a part-time job, your balance stays put until that grace clock runs out-usually around November if you finish in May.
Federal unsubsidized loans, though? Different story. Interest kicks in the moment the loan hits your account. "Interest accrues from the date of disbursement," the feds note, meaning it's stacking up while you're still cracking textbooks.
You can pay it as you go to keep it from ballooning, but if you don't, it gets tacked onto your principal-hello, capitalization-once that six-month grace period ends. Say you borrow $5,500 at 6.53% (the 2024-25 undergrad rate); that's about $30 a month in interest from day one.
What about private loans?
Private loans are a wild card. Most start accruing interest right when the funds are disbursed, just like unsubsidized federal loans. But here's the kicker: terms depend on your lender. Some offer a grace period-six months or even a year post-graduation-while others don't blink, charging interest from the get-go.
"Private loans may accrue interest as soon as they're disbursed," experts warn, so check your loan agreement. Rates can range from 4% to 15%, fixed or variable, making it crucial to read the fine print.
What about deferment or forbearance? Federal loans pause payments, but unsubsidized and private loans often keep accruing interest unless the government steps in (like during COVID-19 relief). Subsidized loans get a break in deferment-Uncle Sam's got your back there. For grad students with Direct PLUS loans, interest starts at disbursement too, with no grace period unless your lender says otherwise.