Benefits of Paying Interest

If you are able to pay the interest while in school or during your grace period you could save hundreds of dollars. Review the information below to see how paying your outstanding interest can impact your monthly payment and the total amount to be repaid.

Your loan accrues interest!

Did you know that you are responsible for paying the interest that accrues on your unsubsidized loans and any private loans that you receive? But, if you are able to pay the interest while in school and during your grace period you could save hundreds of dollars.

The proof is in the numbers.

Review the comparison chart below to see how paying your outstanding interest can impact your monthly payment and the total amount to be repaid. This chart is based on four years of enrollment and a six month grace period.

Category If you can't or don't pay your outstanding interest: If you pay your outstanding interest:
Original Loan Balance $20,000 $20,000
Capitalized Interest $5,700 $0
Total Interest paid prior to repayment: $0 $5,700
Loan Balance when entering repayment $25,700 $20,000
Interest Rate 6.8% 6.8%
Monthly Payment
(Based on a Level Repayment Plan)
$295.76 $230.16
Total Repayment Amount $35,489.54 $33,318.29

*This figure includes the $5,700 in interest you previously paid.

In the example above you can save more than $65 per month if you paid the outstanding interest before it is capitalized (added to the principal balance of your loan).

See how much you could save!

How can I pay my interest?

You can pay your accrued interest at any time. Simply contact your loan servicer to discuss their repayment methods. If you don't know who your servicer is, check NSLDS.ed.gov.

What if I can't or don't pay my interest?

That's okay, you are not required to pay the accrued interest while in school or during your grace period, the interest will be capitalized (added to the principal balance of your loan) when you enter repayment. But if you can afford to pay your interest, you should! It will save you money in the long run!

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