Student Loan Interest | Student Loans | Sallie Mae®

Student Loan Interest | Student Loans | Sallie Mae®


We get lots of questions about private
student loan interest. We’re here to help you understand it better. Let’s get started with some definitions. Principal amount is the total sum of money borrowed, plus any interest that has been capitalized. The interest rate is the rate charged to borrow money.
It may be fixed or variable. A fixed interest rate stays the same for the life of the loan. With a variable interest rate, the interest rate may change due to an increase or decrease of the loan’s index. Accrue is a fancy word for how interest is charged. Like a taxi meter that keeps ticking, interest on your loan, begins to accrue the day the money is sent to your school and it continues to add up until the loan is
paid in full. Here are some of the questions we get asked a lot: Why does my billing statement shows more than the amount that I borrowed? With a private student loan, unpaid interest typically capitalizes at the end of a grace period. Capitalization means that your unpaid interest is added to your principal amount. Check a promissory note for details about your loan. It may help
you reduce your total cost if you pay interest while you’re in school or try
paying more than required monthly payment amount. I’m starting grad school in the fall, will interest accrue while I’m back in school? For most private student loans, interest will continue to accrue. Even if your loan doesn’t require payments while you’re back at school, making payments during this time may help you reduce the total loan cost. I hope this helps you understand private
student loan interest a little better. Visit SallieMae.com for more tips on
managing your loan.

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