When does interest start on unsubsidized student loans

Grace Period

After you graduate, leave school, or drop below half-time enrollment, you will begin a one-time six month grace period before repayment begins. Interest does not accrue on Direct Subsidized Loans disbursed after July 1, 2014 during the grace period. Your federal loan servicer will notify you of the date your loan repayment begins and will provide further details about making payments.

Table of Contents Show

Grace Period
Repayment Comparison Table
National Student Loan Database System (NSLDS)
Exit Counseling
Repayment Plans
How Much Can I Borrow?
Subsidized and Unsubsidized Loan Examples
Subsidized and Unsubsidized Loan Limits
To Apply for a Subsidized and Unsubsidized Loan:
To be Eligible You Must:
To Receive Your Subsidized or Unsubsidized Loan:
Do Unsubsidized loans accrue interest right away?
How often do Unsubsidized loans accrue interest?
Do student loans start interest right away?
During what period do subsidized loans accrue interest?

Repayment Comparison Table

If you have a Direct Unsubsidized Loan, you have the option to pay interest while you are in school, or you can wait until you are no longer enrolled. Our office recommends that you pay the interest to minimize your loan debt. If you do not pay the interest, it will capitalize and be added to your total repayment amount. The example below illustrates the benefits of paying the interest while you are in school.

	With Interest Capitalization	Without Interest Capitalization
	(interest not paid while in school)	(interest paid while in school)
Original Loan Balance	$10,000	$10,000
Capitalized Interest	$4,800	$0.00 *
Current Loan Balance	$14,800	$10,000
Interest Rate	6.8 percent	6.8 percent
Maximum Term	120 months	120 months
Fixed Repayment Amount for 119 months	$170.32	$115
Fixed Repayment Amount for 1 month	$169.09	$114.24
Total Repayment Interest	$5,637.17	$3,808.76*
Total Repayment Amount	$20,437.17	$13,808.76

* Making loan interest payments benefits borrowers in the long run. For example, in this comparison, the monthly installment is $55.24 less and the total repayment at the end of the life of the loan is a savings of $1,828.41 in interest.

National Student Loan Database System (NSLDS)

Review your NSLDS record by logging into studentaid.gov. You can review information about:

Loan servicer assignment and contact information
Repayment begin dates
Total federal loan debt

Exit Counseling

When you have submitted your graduation date in LionPATH, or cease to be enrolled at Penn State, you will be selected for Federal Loan Exit Counseling. No holds will appear on your record, but you will be sent a series of three email reminders to complete the counseling at studentaid.gov.

Exit Counseling provides important information to prepare you to repay your federal student loan(s).

If you have received a Direct Subsidized, Unsubsidized or PLUS loan under the Direct Loan Program or the FFEL Program, you must complete exit counseling each time you:

Drop below half-time enrollment
Graduate
Leave school

Repayment Plans

You will be able to choose a repayment plan that meets your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Typical loan repayment terms are 10 to 25 years.

Review the Student Loan Repayment on the Federal Student Aid site.

The Student Loans online repay tool will guide you to your best repayment option.

Subsidized Loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.

Unsubsidized Loans are loans for both undergraduate and graduate students that are not based on financial need. Eligibility is determined by your cost of attendance minus other financial aid (such as grants or scholarships). Interest is charged during in-school, deferment, and grace periods. Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it’s paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay. See http://www.sfa.ufl.edu/debt-management/“Debt Management & Student Loans” for more important information on the capitalization of interest.

Loan Type	Borrower	Interest Rate (for loans disbursed from 7/1/22 to 7/1/23)	Interest Rate (for loans disbursed from 7/1/21 to 7/1/22)	Origination Fee (for loans disbursed from 10/1/21 to 9/30/23)
Subsidized	Student	4.99% Fixed for undergraduates	3.73% Fixed for undergraduates	1.057%
Unsubsidized	Student	4.99% Fixed for undergraduates	3.73% Fixed for undergraduates	1.057%
Unsubsidized	Grad Student	6.54% Fixed for graduates	5.28% Fixed for graduates	1.057%
PLUS	Parent PLUS	7.54% Fixed	6.28% Fixed	4.228%
PLUS	Grad PLUS	7.54% Fixed	6.28% Fixed	4.228%

	Requirement
Deferment	You may receive a deferment if you are enrolled in school at least half-time or for unemployment or economic hardship
Repayment	There is a 6 month grace period that starts the day after you graduate, leave school, or drop below half-time enrollment. You do not have to begin making payments until your grace period ends.

More information regarding student loans, program requirements, and managing repayment can be found at https://studentaid.govStudentAid.gov.

How Much Can I Borrow?

The maximum amount you can borrow each academic year depends on your grade level and dependency status. See the chart below for annual and aggregate (lifetime) borrowing limits. You may not be eligible to borrow the full annual loan amount because of your expected family contribution or the amount of other financial aid you are receiving. To see examples of how your Subsidized or Unsubsidized award amount will be determined. Direct loan eligibility and loan request amount must be greater than $200 for a loan to be processed.

If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. See your financial aid adviser or https://studentaid.gov/StudentAid.govhttps://studentaid.ed.gov/types/loans/subsidized-unsubsidized#eligibility-time-limit for more information.

Subsidized and Unsubsidized Loan Examples

Example 1:

Alberta Gator is a first year dependent undergraduate student. Her cost of attendance for Fall and Spring terms is $17,600. Alberta’s expected family contribution (EFC) is $10,000 and her other financial aid (such as grants, scholarships and work study) totals $9,000.

Because Alberta’s EFC and other financial Aid exceed her Cost of Attendance, she is not eligible for need-based, Subsidized Loans. She is, however, eligible for an Unsubsidized Loan. The amount she would be awarded would be $5,500. Even though her cost of attendance minus other financial aid is $8,600, she can only receive up to her annual loan maximum (which is $5,500 for a first year dependent undergraduate).

Subsidized and Unsubsidized Loan Limits

The amount you can borrow through the Federal Direct Loan Program is determined by your dependency status and classification in college. The annual and aggregate loan limits are listed in the charts below.

Undergraduate Annual Loan Limits	Dependent Student	Independent Student
First Year	$5,500 (Up to $3,500 Sub)	$9,500 (Up to $3,500 Sub)
Second Year	$6,500 (Up to $4,500 Sub)	$10,500 (Up to $4,500 Sub)
Third, Fourth, and Fifth Year	$7,500 (Up to $5,500 Sub)	$12,500 (Up to $5,500 Sub)
Undergraduate Aggregate Loan Limits	$31,000 (Up to $23,000 Sub)	$57,500 (Up to $23,000 Sub)

Graduate Annual Loan Limits	Unsubsidized*
Graduate	$20,500
Graduate Aggregate Loan Limits	$138,500 (Up to $65,500 Sub)
Pharmacy* (Graduate) Annual Loan Limits	$33,000
Health Professions* Annual Loan Limits	$40,500
Health Professions* Aggregate Loan Limits	$224,000 (Up to $65,500 Sub)

* Some professional students may be eligible for increased unsubsidized loan limits. Contact your adviser to determine if you are eligible.

To Apply for a Subsidized and Unsubsidized Loan:

Complete a FAFSA (Free Application for Federal Student Aid) at https://studentaid.gov/h/apply-for-aid/fafsastudentaid.gov.

To be Eligible You Must:

be a U.S. citizen, national or permanent resident;
be enrolled at least half-time;
not have defaulted or owe a refund to any previous aid program; and
maintain satisfactory academic progress.

To Receive Your Subsidized or Unsubsidized Loan:

Visit ONE.UF at http://one.uf.eduhttp://one.uf.edu and select “Login with Gatorlink.” Login with your Gatorlink username and password. In the new window that appears, scroll to the “Financial Aid” section and select the correct award year under “View Your Summary.”
Scroll to Federal Direct Subsidized or Unsubsidized Loans in your aid summary at ONE.UF. Accept, reduce or decline the loan using the “Take Action” button next to the loan. Students should only borrow what they need.
Complete Entrance Counseling using http://StudentAid.govhttp://StudentAid.govStudentAid.gov.
Complete a Master Promissory Note (MPN) using http://StudentAid.govhttp://StudentAid.govStudentAid.gov.

Do Unsubsidized loans accrue interest right away?

Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan).

How often do Unsubsidized loans accrue interest?

Most student loans accrue interest daily and compound either daily or monthly. Daily accrual means that lenders will divide the APR by 365 and apply that daily interest rate to your principal balance each day.

Do student loans start interest right away?

Interest starts to accrue (grow) from the day your loan is disbursed (sent to you or your school). At certain points in time—when your separation or grace period ends, or at the end of forbearance or deferment—your Unpaid Interest may capitalize. That means it is added to your loan's Current Principal.

During what period do subsidized loans accrue interest?

Subsidized loans are only available for students with financial need. If you qualify for these loans, the U.S. Department of Education pays your interest while you're in school at least half-time and during the six-month grace period after that.