Loans that accrue interest from the date of disbursement, interest which, if unpaid by the borrower, will be added back to the principal through a process called capitalization. Examples include Federal Unsubsidized Stafford (either FFELP or Direct), Federal SLS, Federal PLUS, Health Education Assistance Loans ( HEAL), private loans, and some institutional loans (check your promissory note or ask your medical school financial aid officer).
A loan not based on financial need, and the Federal government does not pay any interest on the loan. The borrower is responsible for all interest from the date the loan is disbursed.
When student loans are unsubsidized, borrowers are responsible to pay all accrued interest, whether accrued in school, or during grace or deferment periods, or during NIH repayment contract periods. Examples include Federal Unsubsidized Stafford (either FFELP or Direct), Federal SLS, Federal PLUS, Health Education Assistance Loans (HEAL), private loans, and some institutional loans. See “Capitalization.
Subsidized loans are based upon financial need. With these loans, the interest is paid by the federal government until the repayment period begins and during authorized periods of deferment afterwards. Unsubsidized loans are not need-based, so all students are eligible to recieve them. Interest payments begin immediately on unsubsidized loans, although you can waive the payments and the interest will be capitalized.
Loans on which the student is responsible for paying from the date of disbursement until the loan is paid in full, regardless of enrollment status.
The interest on these loans accrues while the student is in school, but payments can be deferred until the student leaves school.