Do federal student loan interest rates start accumulating immediately or after graduation?

For subsidized federal loans, the government pays the interest while you're in school (at least half-time) and during the grace period after you graduate. For unsubsidized loans, interest starts accumulating immediately from the day the loan is disbursed to your school. Many students don't realize this and end up with a lot more debt than they expected. You can choose to pay the interest while in school or let it capitalize (add to your principal balance).

yes the unsubsidized ones start right away!! its like the worst surprise ever when u graduate lol. i ignored mine for 4 yrs and had like $2000 extra interest added to my balance when i graduated last year :

The financial aid system is DESIGNED to trap students in debt!! They deliberately make it confusing so you don't understand what you're signing up for. Of course they start charging interest right away on unsubsidized loans - it's how they make BILLIONS off struggling students! And with the new FAFSA and SAI calculations, they're giving out FEWER subsidized loans and MORE unsubsidized loans. The whole system is BROKEN!!!

I actually just called Federal Student Aid about this exact question last week! Interest policy depends on loan type: - Direct Subsidized: NO interest while in school or during grace periods - Direct Unsubsidized: Interest starts accumulating immediately - Parent PLUS: Interest starts immediately - Grad PLUS: Interest starts immediately I used Claimyr (claimyr.com) to get through to an actual FSA agent without waiting on hold for hours. They have a video showing how it works: https://youtu.be/TbC8dZQWYNQ. The agent explained that interest rates are fixed for the life of the loan based on when you first took it out. For 2024-2025, undergraduate rates are around 6.5% for both subsidized and unsubsidized.

Quick tip that saved me thousands: If you have unsubsidized loans, try to pay at least the interest while in school. Even $25-50 per month makes a huge difference. I used my part-time job money just for this, and by graduation, I avoided having $3,800 in interest capitalized onto my principal. Your future self will thank you!

I had this same question when I was in school. In my 3rd year I realized I should have been paying at least the interest on my unsubsidized loans all along. By the time I graduated, I had about $3,700 in interest capitalize on a $16,000 unsubsidized loan balance. Now I'm paying interest on that interest which sucks.

omg i just remembered something important!! if u have subsidized loans make sure ur enrolled at least half time (usually 6 credits) or they START charging interest!! my friend took only one class last semester and didnt know this and got charged!

To answer your follow-up question about getting more subsidized loans: Unfortunately, your subsidized loan eligibility is determined by your financial need (Cost of Attendance minus SAI). There's no way to negotiate for more subsidized loans specifically. However, you can appeal your SAI if you've had changes in financial circumstances not reflected on your FAFSA. This could potentially increase your overall aid eligibility, including subsidized loans.

Just wanted to add another perspective as someone who graduated a few years ago - if you're really struggling with money during school, prioritize paying at least SOMETHING toward your unsubsidized loan interest, even if it's just $10-15 a month. I used to skip coffee a few times a week and put that money toward interest payments. Also, check if your school offers any emergency grants or work-study positions specifically for students with high financial need. Some schools have hardship funds that can help reduce your loan dependency. The key is being proactive about understanding your debt load early rather than dealing with the shock at graduation!