For unsubsidized loans, when does interest begin to accrue?

For unsubsidized loans, when does interest begin to accrue?

• A. After graduation
• B. Only after a grace period
• C. Never
• D. From disbursement

Answer: (D)

Interest on unsubsidized loans starts to accrue from the moment the loan funds are disbursed to the school. That means the borrower is responsible for interest as soon as the money is issued, even while you’re in school or during any grace period. If you don’t pay that interest while you’re in school, it’s added to the loan principal (capitalized) when repayment begins, which makes the total amount you repay higher over time. You can reduce the overall cost by paying interest as it accrues. This is why the statement “from disbursement” best describes when interest begins for unsubsidized loans.

Interest on unsubsidized loans starts to accrue from the moment the loan funds are disbursed to the school. That means the borrower is responsible for interest as soon as the money is issued, even while you’re in school or during any grace period. If you don’t pay that interest while you’re in school, it’s added to the loan principal (capitalized) when repayment begins, which makes the total amount you repay higher over time. You can reduce the overall cost by paying interest as it accrues. This is why the statement “from disbursement” best describes when interest begins for unsubsidized loans.