When your student enters repayment, any unpaid accrued interest will capitalize (be added to the principal balance of the loans). Capitalization
increases their principal balance, so they will pay more in interest over the life of the loan. This means their monthly payment amount will be
higher when they enter repayment or their repayment period will be longer and they will make more payments. Payments can be made at any time by
anyone on behalf of the student.
The following example shows monthly payments and the total repayment amount when they pay the interest while in school compared to when they do
not pay the interest and it is capitalized. This example uses an interest rate of 8.25%. The actual amount of interest that capitalizes depends
on factors such as your student’s loan amount, interest rate and length of time while in school.
|While In School
||Capitalized Interest for 12 Months
||Principal to Repay
||Number of Payments
||Total Amount to Repay
|When interest is paid
|When interest is not paid
1This includes $1,238 of interest paid while in school.
Result: If you pay the interest while in school, you will save $15 per month and $585 over the life of the loan.